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FEB 11 2002 !

City of Boston
Thomas M. Menino, Mayor

Operating Budget Fiscal Year 2002
Capital Plan Fiscal Years 2002-2006

Volume I - Overview of the Budget

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Thomas M. Menino, Mayor

Dennis A. DiMarzio, Chief Operating Officer

Edward J. Collins, Jr., Chief Financial Officer

Office of Budget Management
Lisa Signori, Director

Karen Ahern Connor, Deputy Director, Operating Budget

Roger McCarthy, Deputy Director, Capital Planning

Operating Budget and Capital Planning Staff

Dorothy Baxter
Penny Berrier
Michele Bilodeau
Carol Brait
Robinson Butterworth
Darrell Crockett
Lynda Fraley
Chris Giuliani
Melissa Goff
Benjamin Hanley
John Hanlon
Era Kaplan
James Kennedy
Marianne Regan
Anthony Reppucci
Ralph Rosati
Richard Sylvia
Gregg Tivnan
Mirta Velez
James Williamson
Franklin Wong

Systems Administrator
Gerard Rufo

Central Office Staff
Deborah DeLeo

Lilianna Guzman
Renee Hogan
Jacquelyn Murphy

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Table of Contents

Volume | Overview of the Budget

Letter of Transmittal: Thomas M. Menino, Mayor
Executive Summary

Summary Budget

City Council Orders

Revenue Estimates and Analysis

Innovations in Education

Budget and Performance Goals

Financial Management of the City

Capital Planning

Statutes and Ordinances Governing Boston's Operating and Capital Budgets
Boston's People and Economy

Budget Organization and Glossary of Terms

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GOVERNMENT FINANCE OFFICERS ASSOCIATION
Distinguished
Budget Presentation
Award

PRESENTED TO
City of Boston,

Massachusetts

For the Fiscal Year Beginning
July 1, 2000

loan pry bing Lifhipd Ea

President Executive Director

The Government Finance Officers Association of the United States and Canada (GFOA)
presented an award of Distinguished Presentation to the City of Boston for its annual budget
for the fiscal year beginning July 1, 2000.

In order to receive this award, a governmental unit must publish a budget document that
meets program criteria as a policy document, as an operations guide, as a financial plan and
as a communication device.

The award is valid for a period of one year only. We believe our current budget continues to
conform to program requirements, and we are submitting it to GFOA to determine its
eligibility for another award.

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CITY OF BOSTON - MASSACHUSETTS

OFFICE OF THE MAYOR
THOMAS M. MENINO

June 26, 2001
TO THE CITY COUNCIL

Dear Councilors:

| retransmit herewith my Recommended Budget for Fiscal Year 2002 for the City of Boston and County of
Suffolk. The Recommended Operating Budget totaling $1.8 billion is 4.4 percent greater than the Fiscal
Year 2001 Budget and would represent the City’s 17" consecutive balanced budget.

As you are aware, the City is still awaiting final action on the State’s Fiscal Year 2002 Budget — Senate
deliberations are underway and Conference Committee action will follow. The Fiscal Year 2002 Budget is
based on the best information the City has available about the likely outcome of the State’s Fiscal Year
2002 Budget.

Consistent with my original budget transmission submitted to you in April, this budget emphasizes
progress, partnerships and priorities. It invests in those initiatives that have created so much progress for
Boston. It underscores our ongoing efforts to build partnerships that strengthen neighborhoods and serve
families, particularly in those areas where City government cannot and should not go it alone. Most
important, this budget makes clear that people are our highest priority, particularly those in greatest need
including children, seniors and working families.

Although this budget submission does not contain an appropriation for housing, my strong commitment to
increase and protect Boston’s affordable housing supply by leveraging $30 million in city resources over
three years, has not changed. I will be coming back to you with a separate appropriation order for Leading
the Way (the City’s comprehensive three year strategy to increase affordable housing) as soon as the
proceeds from the sale of 154 Berkeley Street become available for transfer to the Leading the Way
account in the general fund.

The major change in the resubmission is a reduction of $1.7M in the appropriation requested for the
Suffolk County Sheriff, consistent with the reduction in the maintenance of effort requirement contained in
both the House and the Senate budget proposals. This reduction will be used to fund the increase in the
School Department’s appropriation needed for the FY02 costs associated with a collective bargaining
agreement settled after the April submission. In this resubmission funds were also reallocated from the
Collective Bargaining Reserve to the Graphic Arts and Library departments to reflect collective bargaining
contracts that have been settled since April. As requested, the City Council’s budget was also increased to
include funding for an Assistant Budget Director, meeting room renovations, floor cleaning services, as
well as a mobile sound system. The total bottom line of the recommended FY02 budget of $1.8M has not
changed.

BOSTON CITY HALL ¢ ONE CITY HALL PLAZA * BOSTON * MASSACHUSETTS 02201 ¢ 617/635-4000

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This budget balances competing priorities within the City’s available resources. I respectfully request your
favorable action on the Fiscal Year 2002 Operating Budget and the Five Year Capital Plan for FY02 to
FY06.

Sin

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Thomas M. Menino
Mayor of Boston

CITY OF BOSTON - MASSACHUSETTS

OFFICE OF THEsMAYOR
THOMAS M. MENINO

April 10, 2001
TO THE CITY COUNCIL

Dear Councilors:

I transmit herewith my Recommended Budget for Fiscal Year 2002 for the City of Boston and County of
Suffolk. The Recommended Operating Budget totaling $1.8 billion is 4.4 percent greater than the Fiscal
Year 2001 Budget and would represent the City’s 17" consecutive balanced budget.

This budget is about progress, partnerships and priorities. It invests in those initiatives that have created so
much progress for Boston. It underscores our ongoing efforts to build partnerships that strengthen
neighborhoods and serve families, particularly in those areas where City government cannot and should not
go it alone. Most important, this budget makes clear that people are our highest priority, particularly those
in greatest need including children, seniors and working families.

You will note that the budget increase for this year is smaller than in previous years. Although the Boston
economy is strong and Boston’s fiscal health has been recognized and rewarded by bond rating agencies,
hard choices were required in FY02 due to uncertain state and federal commitments to core priorities such
as continued education reform, housing and youth programs, including summer jobs.

Despite these uncertainties, this budget successfully provides for further improvement in the educational
and physical quality of the Boston Public Schools, enhanced public safety, and the consistent high quality
of basic services to which Boston residents have grown accustomed. The budget includes improvements to
over 100 parks and playgrounds, increased resources for seniors, expanded after-school programming,
‘State-of-the-art equipment for firefighters, a new class of police recruits, and an array of public health
initiatives aimed at emerging issues, from mental health to substance abuse to families transitioning off
welfare. I continue to direct resources to ensure that public buildings are genuine neighborhood assets. A
new library and two new Community Centers will open this year and I continue efforts to improve and
maintain libraries, schools, community centers, police and fire stations, and neighborhood business

districts.

This budget is the result of a review of existing expenditures and new program needs and provides the best
allocation of the City’s available resources. I look forward to working with you during this process and I
respectfully request your favorable action on the Fiscal Year 2002 Operating Budget and the Five Year

Capital Plan for FY02 to FY06.

Sincerely,

4) ae

Thomas M. Menino
Mayor of Boston

BOSTON CITY HALL ¢ ONE CITY HALL PLAZA ¢ BOSTON * MASSACHUSETTS 02201 © 617/635-4000
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Executive summary

INTRODUCTION: Progress, Partnerships,
and Priorities

The FY02 Operating Budget is a reflection of the
values and priorities that Boston’s families share.
It renews our commitment to those initiatives and
ideas that have created so much progress for
Boston. It underscores our ongoing efforts to forge
partnerships that strengthen neighborhoods and
serve families. In short, this budget makes clear
that people are our highest priority, particularly
those in greatest need including children, seniors
and working families. Meeting this obligation
required hard choices. Although the Boston
economy is strong, uncertain state and federal
support for core issues like continued education
reform, housing and youth programs mandated
caution. Despite these concerns, this budget
successfully invests in those areas that promise
the greatest return over the long-term, starting
with our children’s education and extending all
the way to capital projects that create new public
assets in every neighborhood. It also invests in
those areas that best improve the quality of City
living for Boston residents. These include a series
of new Public Health programs addressing issues
that range from mental health to drug abuse to
assisting families coming off welfare,
improvements to over 100 parks and playgrounds,
increased resources for seniors, expanded after-
school programming, state-of-the-art equipment
for firefighters, and a new class of police officers
to maintain the appropriate level of staffing.

The FY02 Operating Budget of $1.8 billion in
recurring revenue and recurring expenditures
represents a 4.1% increase over the FY01 recurring
revenues and expenditures. This budget is the
result of a review of existing expenditures and
program needs, and provides the best allocation of
the City’s available resources.

This year’s Five Year Capital Plan totals $1.5
billion and includes $117.4 million in new FY02

Eexaer Cautyigvae

authorizations for 88 projects. Boston’s Five Year
Capital Plan is an investment program for the
City’s future. The City’s Five Year Capital Plan has
been consolidated with the Operating Budget to
present a complete picture of the City’s resources
and strategic financial plan.

Summary Of Additional Resources

The FY02 Budget represents $69.9 million in
additional funds from recurring revenue sources.
Consistent with last year’s budget, the recurring
revenue increase is led by the City’s largest
revenue source, the property tax levy. Net
property tax revenues are projected to grow by 5.8
percent in FY02. This year, the City of Boston is
projecting only a modest increase in state aid
allocated to Boston through the State FY02 budget
process. With state aid and net property tax levy
making up approximately 80 percent of the City’s
revenues, the City was challenged to meet its
needs within available resources, so that the City’s
budget remains balanced. The FY02 Budget is
soundly balanced based on reasonable
assumptions. Figure | illustrates the sources of
increased recurring revenue for the FY02 Budget.

The available revenue growth provides the basis
for planning the FY02 appropriations and fixed
costs. The FY02 Budget includes $69.9 million in
recurring expenditure increases consisting of non-
discretionary costs and investments in some new
and expanded programs.

In keeping with the Mayor’s commitment to
improve education, the FY02 Budget allocates 35
percent or $24.6 million of the recurring revenue
increase to Schools. Appropriations for City
departments net of non-recurring appropriations
increase $19.3 million. Non-discretionary
expenditures increases are as follows in the FY02
Budget: fixed costs for pensions, debt service and
state assessments are $18.4 million or 6 percent,
and health insurance is $11.3 million or 13
percent. In addition, the FY02 Budget establishes

Summary 1

a $15 million collective bargaining reserve for the
projected impact of unsettled collective
bargaining agreements (an increase of $8.8 million
over the remaining FY01 collective bargaining
reserve). (Figure 2).

FY02 Sources of Increased Revenue
Recurring

Millions

$50

$40

$30

$20

$10

$0
Net State Other Misc. Lic.& Excises
Levy Aid Dept. Permit

Figure 1

FY02 Allocation of Increased Revenue

Millions Recurring

$35

$30

$25

$20

$0 ;
Schools Fixed City Health Coll. Other
Costs Depts. Ins. Barg.

Figure 2

Included in the FY02 Budget is $1.9 million in non-
recurring revenue to fund the first year of a five
year after-school public-private partnership, as
well as the City’s $1 million annual contribution to
the Risk Retention Reserve. A detailed discussion
of the City’s revenues and expenditures can be
found in the Summary Budget chapter.

Boston's Economy

The City’s economy continues to perform well with
low unemployment, a diverse economic base, and
robust property value growth. The Boston area’s
economy is well balanced and well positioned in
sectors of the economy with growth potential such
as technology and biotech.

The City’s fiscal health was recognized in February
2001, when Moody’s Investor Service increased the
City’s bond rating from Aa3 to Aa2. This upgrade
gives the City credit for its long history of balanced
budgets, prudent fiscal policies, and a
conservatively structured debt position with
manageable future borrowing needs. This upgrade
comes one year after Standard & Poor’s Rating
Service upgraded the City’s bond rating from A+ to
AA- in January 2000. Credit quality is analyzed to
determine the interest rate that should be paid for
a municipality's bonds. A higher credit rating
translates into real dollar savings for the City.

The high priority City management places on
adopting sound fiscal policies ensures that the
City will maintain balanced financial operations
even if the Boston area economy does not continue
its recent rapid growth. The majority of the City’s
workforce is expected to remain stable in FY02
with increases driven primarily by investments in
education and maintaining an appropriate level of
staffing in Police.

INVESTING IN EDUCATION
FY02 Highlights:

e Of $69.9 million in new City revenues, the
schools receive the lion’s share.

e $27 million invested to expand the Transition
Program and Mathematics Support Plan to help
students pass the MCAS, as well as expand
after-school math instruction.

e New teacher hires to reduce class sizes at all
Srade levels.

e More than $1 million new dollars for Boston
Community Centers to expand After-School
Programs.

No other investment promises a greater return

than children, beginning with their education.

This budget continues to focus resources to

improve teaching and learning in Boston’s

classrooms. An additional $2.7 million is included
to expand the Transition Program, with its primary

Executive Summary

focus on literacy, and the Mathematics Support
Plan to address the City’s challenge of accelerating
student achievement in mathematics. The
Mathematics Support Plan, which began in FYO1,
will be broadened in FY02 to include after school
instruction to students who need it most, using the
City’s very best math teachers. These two critical
initiatives help the City’s lowest performing
students meet the rigorous standards and high
expectations that are the foundation of the School
Committee's promotion policy, Focus on Children,
a multi-year reform plan, and the Commonwealth’s
graduation requirements.

The results of the City’s previous investment are
encouraging. Over the past two years, Boston's
Massachusetts Comprehensive Assessment System
(MCAS) results improved across all grades and
subject areas. Boston’s gains exceeded or equalled
statewide gains in every grade and subject.

The FY02 Budget also includes a number of new
and continuing programs critical to the
implementation of Focus on Children. A total of
$4.4 million in new resources in this budget will
contribute to progress in the following priority
areas: movement toward smaller learning
communities at Boston, South Boston and
Dorchester High Schools, the purchase of new
instructional materials in support of the arts and
the Mathematics Support Plan, a textbook
inventory control plan, additional school safety
and support services, and repairs and
maintenance of school buildings. The purchase of
instructional materials in the arts, including
dance, music, theatre and visual arts will provide
the necessary tools and materials that enable
Boston to implement the BPS Arts Standards.

Also included in the FY02 Budget is funding to
reduce class size at all grade levels and additional
professional development time for teachers.

The Mayor’s 1999 State of the City address
stressed the importance of bringing neighborhoods
together through schools as community
institutions. This year’s Five Year Capital Plan
includes the authorization for the construction of
three new schools: Orchard Gardens (grades K-8),
Brunswick Gardens (grades 6-8) and Mildred
Avenue (grades 6-8). The Capital Plan also
includes authorization to begin design and
acquisition for a major renovation and addition at
the Burke High School.

Ex e816 ULtiv é

Boston was the first major urban public school
district in America to connect every school to the
Internet and as such has been recognized as a
leading model for its school technology initiative.
The City continues to invest in school technology
through both the FY02 Budget and Capital Plan.
By the end of FY02, not only will every school be
connected to the Internet but also every
classroom in 95 schools and the student to
computer ratio will be 5:1.

Just a few years after Mayor Menino made
education reform a top priority, Boston’s schools
are showing signs of promise. That promise is
reflected in modern buildings and classrooms and
the determination of the City of Boston to give our
children every opportunity to succeed.

The FY02 Budget continues funding for the youth
development services offered by numerous
departments and programs such as Public Schools,
Public Libraries, Community Centers, Parks and
Recreation, the Pubic Health Commission and the
2:00 to 6:00 Initiative. Boston Community Centers’
budget will increase 6%, or $900,679 million in
order to expand After School Programming. During
FY02, the City will continue to develop and
implement an integrated child care strategy,
including a plan to guide the City’s efforts to help
families and local communities meet their child
care needs; a technical assistance program to offer
technical advice and support to agencies and
individuals seeking to offer child care services to
City residents; and a public education campaign to
educate parents about how to find quality,
licensed child care.

A full review of goals, accomplishments, and
finances of the Boston Public Schools can be found
in the Education Chapter.

CITY LIVING KEEPS GETTING BETTER
FY02 Highlights:

e $10 million for a state-of-the-art fire radio
system.

e A new class of police officers to maintain an
appropriate level of staffing

e An 8.2% increase in the Elderly Commission
budget to improve the Senior Shuttle operations
and expand public/private partnerships.

e Expanded neighborhood street cleaning.

Summary 3

¢ $300,000 to install new school zone and safety
Zone traffic signals at crosswalks and
intersections around schools.
This budget continues the City’s emphasis on
delivering services at the consistently high level to
which residents have grown accustomed. From
public space to public safety, from street cleaning
to street repairs, Boston’s constant efforts to
improve the quality of its services is a major
reason that Boston is one of the most livable cities
in America.

With crime in Boston falling to the lowest level in
more than 30 years, the sense of security in the
City’s neighborhoods is high. The City takes pride
in the improvement it has fostered in its
neighborhoods. From the City’s ReStore Boston
Program, which works with businesses on
storefront improvements, to the Abandoned
Housing Initiative, all of the City’s neighborhoods
have benefited from neighborhood enhancements.
The goal, however, is to make every residential
neighborhood an even better place to live. The
FY02 Budget and Capital Plan provide the funding
to enhance the City’s neighborhoods for all
residents and families.

Pave the Way 2000 will be well underway in FY02.
Pave the Way 2000 is an extraordinary program of
street resurfacing and sidewalk repairs that will
contribute to better roadway conditions
throughout the City. The Pave the Way 2000
program adds $15 million to the City’s standard
roadway and sidewalk program. These additional
resources will result in 91 miles of neighborhood
roadway paving and 40 miles of sidewalk repairs.

The FY02 Budget expands the City’s neighborhood
street cleaning program. The City is moving to
respond to the increased demand for street
cleaning services.

In FY02, traffic safety will continue to be a
significant element of the neighborhood policing
strategies of the Boston Police Department, the
traffic safety efforts of the Transportation
Department, and the Walk this Way pedestrian
safety program coordinated by the Public Health
Commission. Community Policing surveys indicate
that traffic is both a public safety concern and a
quality of life issue for city residents. Enforcement
will be targeted on roadways and intersections
that have been identified as problem locations.

One of the City’s goals for FY02 will be to reduce
the number of pedestrians involved in vehicle-
related accidents. In FY02, the Boston
Transportation Department is authorized to spend
over $300,000 to install approximately 20 new
school zone and safety zone traffic signals and
other traffic safety materials throughout the City.
BTD will also use $750,000 in traffic signal
equipment capital spending to target
improvements to some of the city’s most hazardous
intersections. BTD also is authorized to spend
$260,000 to improve and maintain crosswalks and
other traffic safety pavement markings across the
City.

In the FY02 Budget, the Elderly Commission
enjoys one of the largest percentage increases of
any City department. This 8.2% increase in its
budget, approximately a quarter of a million
dollars, will enable the installation of a new Senior
Shuttle Scheduling and Tracking System so that
this vital resource operates at maximum reliability
and efficiency for seniors. The new dollars also
authorize a reorganization of the Elderly
Commission to focus on improving public/private
partnerships and constituent relations.

Through the FY02 Budget and Capital Plan, the
City will be doing more to support the arts and
cultural activity in Boston. $1.1 million is
authorized for renovations to the Strand Theater.
A portion of the Neighborhood Improvement
through Capital Expenditures (NICE) funding is
earmarked for a demonstration project for public
art in the Capital Plan. The City is also increasing
the Cultural Affairs budget by more than 7%,
among the largest percentage increases of any
department in the FY02 Budget.

BUILDING STRONG NEIGHBORHOODS
FY02 Highlights:

e Over 100 balltields, playgrounds, parks and tot
lots to undergo improvements, and 1,000 new
trees planted in the neighborhoods.

e The first new library to be built in Boston in two
decades will open in Allston-Brighton.

e 7wo new Community Centers will open, the
Tobin Community Center and the Vine Street
Community Center.

e Anew D-4 Police Station will open in the South
End.

Executive Summary

e Ground will be broken on 8 new schools.
Through the Five Year Capital Plan, the City
continues to transform its buildings and open
space into neighborhood assets that all families
can enjoy. Examples include renovating the
Strand Theater, enhancing schoolyards across the
City, and the opening of Millennium Park in West
Roxbury.

The City’s library system plays an important part of
every neighborhood. In recent years, the City has
made significant improvements to the library
services it offers. The FY02 Budget and Capital
Plan support future library improvements.

A new, state of the art branch library in Allston
will be fully operational in FY02. The Allston
Library will be the first new library built in Boston
in two decades. The 20,000 square foot library will
have courtyard gardens, space for leisure reading,
and a research area with computers and reference
materials.

Libraries strengthen learning for all of the people
of Boston, especially school age children. During
the next fiscal year, the City will forge stronger
partnerships between schools and libraries to
maximize the return on the investment the City
has made in both departments. Technology already
in place at both Schools and Libraries will support
these future-learning connections.

In FY02, two new Community Centers will open.
These state-of-the-art buildings will offer
programming that includes after-school programs,
ESOL for new Bostonians learning English, and
even feature new senior centers.

But building strong neighborhoods doesn’t just
mean buildings. Open space is vital to the City’s
quality of life. In FY02, the Parks & Recreation
Department will make improvements to more than
100 ballfields, playgrounds, parks and tot lots,
including a $3.5 million authorization for major
renovation of Waterfront Park.

The FY02 Budget also reflects an aggressive
continuation of the City’s tree planting program.
With 2,000 trees already planted in calendar year
2000, the FY02 budget authorizes an additional
1,000 trees, further beautifying Boston
neighborhoods. The urban forest of street and
shade trees make neighborhoods more appealing
and livable, and also contribute to improved
property values. While every location is not

EX ¢e¢ Uti Ve

suitable for a street tree, the City is well
positioned to respond to community groups
seeking trees. In FY02, the Parks & Recreation
Department will be partnering with community
groups that wish to improve a neighborhoods
streetscape.

Leading the Way

Affordable housing is one of the City’s top
priorities. Leading the Way, the City’s
comprehensive strategy to increase and protect
Boston’s housing supply, lays the groundwork for
the City to accomplish its goal to create more
affordable housing. To meet the goals set forth in
Leading the Way, the City is combining existing
programs with new resources and initiatives. The
Leading the Way strategy commits $33 million in
City resources from the sale of surplus property.
The first $13 million toward that commitment was
appropriated during the current fiscal year. The
City anticipates requesting an appropriation for
the next $13 million during FY02, once the sale of
154 Berkeley Street has been finalized.

As articulated in Leading the Way, the City cannot
solve a regional housing crisis without an
increased commitment from the state and federal
governments and strong collaborations with
private partners.

The City is well on its way to successfully meet the
housing goals expressed in Leading the Way.
Overall housing production is ahead of what is
needed for the City to meet the Leading the Way
production goal of 7,500 new units.

PREVENTIVE HEALTH CAMPAIGNS
ADDRESS CRITICAL NEEDS

FY02 Highlights:

¢ Boston's Public Health Commission (PHC) will
expand mental health programs.

e PHC will launch a partnership with other City
agencies to combat heroin use and improve
access to substance abuse treatment.

e PHC will launch new programs to assist families
transitioning otf of welfare.

The health of a City’s population is an important

indicator of its stability. The Boston Public Health

Commission (PHC) continues to fulfill its mission

to preserve, protect, and promote the health of the

people of Boston, particularly those who are most
vulnerable. The PHC works collaboratively with

Summary 5

the residents of the City, as well as with area
hospitals, community health centers and other
community based-organizations to foster access to
health services for the culturally and economically
diverse communities of Boston. While the FY02
Budget funds initiatives critical to the health of
Boston’s youth and adult population, the PHC
nonetheless deserves praise for its ability to
consistently shift resources to meet emerging
needs. To promote a healthier teen population, the
PHC will deliver expanded programs focusing on
mental health and substance abuse prevention
and treatment. One initiative will target
improvement in mental health among young
people in our city by promoting the best mental
health care practices, increasing training for
school staff and youth professionals, and initiating
a public education campaign to reduce the stigma
around mental health. During the current fiscal
year PHC has expanded mental health services
offered at school-based health centers. In FY02,
the PHC will also embark on a partnership with
other City agencies to combat heroin use among
young Boston residents.

To improve the health of the adult population,
PHC will continue to pursue its Healthy Heart
Campaign, and expand its home visiting and
outreach programs, which connect services with
families most in need. In FY02 the PHC also will be
conducting a concerted campaign to prevent
human cases of West Nile Virus in Boston. The
FY02 Budget provides for small grants to
community groups for education, prevention and
reduction of mosquito breeding sites.

CHANGING THE WAY GOVERNMENT
WORKS

FY02 Highlights:

e Lstablishment of a Victim Assistance Unit and
Financial and Computer Crimes Unit in the
Boston Police Department.

e A new face-to-face consumer mediation
program in the Mayor's Office of Consumer
Affairs and Licensing.

e The newly appointed Recreation Director, using
existing resources now spread across three City
departments, will bring greater coordination,
easier accessibility, and higher quality
recreation opportunities to residents.

e Anew energy management working group will
be formalized to maximize City government
energy efficiency and realize cost savings.

At the end of his second term, Mayor Menino has

taken a number of innovative steps to improve

traditional functions of City government.

Departments and Cabinets are constantly

challenged to rethink existing programs, improve

service delivery, and pursue new opportunities
and partnerships. The FY02 Budget reflects the
reinvention that is underway in many City
departments and begins the transition for
additional changes to come.

The Fire Department began the process of
reorganization and reform in earnest in calendar
year 2000. The result is continued efforts to
implement positive change. A new Chief of the
Boston Fire Department was appointed.
Reassignments within the command staff were
made and, after the necessary notification and
discussions with the labor unions, the Department
is in the process of hiring its first Human
Resources Director. That position will oversee
both civilian and uniformed personnel functions.
The Fire Department has also made successful
efforts in correcting the excessive costs associated
with injured on duty issues and overtime related
to staffing. Further, management continues to
negotiate with the Firefighters Union to gain
improved contractual language that will allow
opportunity for additional productivity and
efficiency gains.

The Boston Police Department will also initiate
new practices in FY02 to not only improve their
ability to address cutting edge criminal justice
issues, but also manage the Department better.
The BPD will establish two new units in the
Bureau of Investigative Services, the Victim
Assistance Unit, and the Financial and Computer
Crimes Unit. The BPD will also institute a new
Round Table Review System of performance
review for uniform personnel.

In FY02, significant multi-year investment to bring
new cutting edge technology to the City’s Auditing
Department is fully realized. This technology is
enhancing the ability of the City to further
reinvent government and improve service delivery
and cost-effectiveness. For example, the Auditing
department combined a new business practice

ES@ercrustiiivee® SeUamanteaanay

with the rollout of new technology to improve the
payroll process. This improvement consolidated
all wages earned in a pay period in one check,
which results in the City saving resources
previously spent in check processing. The
combination of standardization of pay days and
time and labor reporting with the new technology
has eliminated manual calculation of earnings,
reduced the number of printed checks, and
reduced the time spent on check distribution.
These resource savings are realized in all
departments but most significantly in Auditing,
Management Information Services, Treasury, and
the Boston Public Schools.

During the FY02 budget process, the Mayor also
ordered the examination of several inter-agency
relationships in order to determine organizational
alternatives that will improve outcomes and better
serve the citizens of Boston.

The FY02 Budget continues the progress in
improving the delivery of recreation services. The
expertise of various departments and
organizations will be working collaboratively to
develop a strategic plan for how the City can
deliver even higher quality recreation services.
The FY01 Budget identified that the City of Boston
was taking the first step to centralize the focus of
the City’s recreation programs by creating a
position that would coordinate the delivery of
recreation. In January 2001, a Recreation Director
joined the City’s team. During Phase II the
Director will use the available resources to
respond to the challenges of improving
programming.

The FY02 Budget also lays the foundation for the
City to think strategically about energy
management. A City Hall Working Group,
composed of players from various departments,
will work in conjunction with an Energy Think
Tank to address energy issues that range from
ensuring a high level of service, obtaining
affordable, competitive pricing, reducing demand
and facing the challenge of conservation. The
Energy Think Tank will create a partnership
among industry officials, local government
officials, and academics to assist and leverage the
City’s role in energy management in the broader
community.

As residents become more aware of their role as
consumers, the demand for consumer services is

Esxs@ vce Urteirvie

increasing. In FY01, the Consumer Affairs &
Licensing Department was expanded to facilitate a
new consumer protection program to help
consumers avoid falling victim to fraud. In FY02,
Consumer Affairs and Licensing will launch a new
“face to face” mediation program to help resolve
consumer disputes.

Another area where Boston is leading the way
under Menino’s leadership is after school
programming. In FY02 the new initiative, Boston’s
After School for All Partnership, leverages
resources from a diverse group in the education,
nonprofit, and business sectors to support high
quality after-school activities. This initiative will
provide Boston children with access to high-
quality, affordable, safe, and engaging after-school
opportunities that enhance their learning and
overall development.

In response to the Mayor's recommendation, the
City will assign management evaluation teams
during FY02 to review additional service delivery
systems and outcomes across City departments. In
addition to the aforementioned energy issue, other
service areas discussed for further study include
recreation programming, after-school
programming, street lighting and permitting.

Additional information about improving services
can be found in the FY02 Budget and Performance
Goals Chapter.

THE SOUTH BOSTON WATERFRONT - AN
ECONOMIC ENGINE

The Boston Convention and Exhibition Center
(BCEC) is the keystone of new waterfront
development. The BCEC, which is on schedule for
substantial completion in Spring 2004, is expected
to attract thousands of new visitors and millions of
new dollars into Massachusetts each year, and to
serve as a Catalyst for the development of new
hotels in the area. Residential character will be an
essential ingredient in the South Boston
Waterfront. Parcels in the district will also include
new cultural facilities, open spaces, and gateways
to Boston Harbor and the Islands.

The BCKC is an $800 million public investment
exceeded in value only by the Central Artery
project. For the project’s site acquisition and site
preparation carried out by the BRA, the
Convention Center Act allocates approximately
72% of the assumed maximum for this cost to the

Summary 7

City. The state is financially responsible for the
full cost of construction, a significantly larger cost
component of the project. Fundamental
accomplishments to date include both on-time
completion of site acquisition and continued on-
time maintenance of the site preparation
schedule, with the City’s projected annual debt
service for the project remaining well below the
projected annual estimates for the revenue
sources earmarked to pay the debt in the City’s
BCEC financial plan.

The City assumes that its current revenue base
will not be utilized to fund the BCEC. The total of
new revenues collected during the first three years
that are earmarked to pay for the BCEC debt have
exceeded the estimates in the financial plan
submitted to City Council back in FY98. The key to
this positive variance is the two largest supporting
revenue sources, hotel excise from new hotels and
the sale of hackney carriage licenses. The state,
through the Massachusetts Convention Center
Authority (MCCA), is financially responsible for
the construction phase of the project. A fuller
overview of the BCEC project and its financial
implications can be found in the Capital Planning
Chapter.

Budget Document Structure

The Operating Budget for FY02 and Five Year
Capital Plan for FY02-06 is presented in three
volumes.

Volume I is an overview of the City’s financial
position and policy direction.

Volumes II and III, which are organized by
cabinet, present the budget detail for each
department's operating budget and capital
authorizations. Refer to the chapter on Budget
Organization and Glossary for an illustration of the
City’s organizational chart.

The City’s Operating Budget is built at the
program level for each department, which is the
basis for budget planning. However, line item
detail is only provided in this budget document at
the department level. Program line item detail is
available upon request.

In addition to line item expenditures, Volumes II
and II] provide a mission statement, key
objectives, as well as past and promised

performance levels for each department. For those
departments with capital projects, a project
profile is provided for every capital project, which
includes authorization information as well as
planned spending levels.

Definitions of the terms used throughout the
budget document are presented in the glossary,
which can be found in the chapter titled Budget
Organization and Glossary.

Technical Note

The City of Boston’s combined FY02 Operating
Budget and FY02-FY06 Capital Plan was published
using Microsoft Word 2000. Graphics were
generated using Microsoft Excel 2000. Hyperion
Pillar 4.6.2, and Microsoft Access 97 were used for
data management and analysis.

All production was done within the Office of
Budget Management. Document production
assistance was provided by the City of Boston
Graphic Arts Department. Technical development
and support was provided by MicroData Group,
Inc.

Executive Summary

us SI

summary Budget

OVERVIEW

The FY02 Budget of $1.770 billion in recurring
revenue represents a $69.9 million or 4.1%
increase over the FY01 Budget supported by
recurring revenues. Included in the total FY02
Budget is $1.9 million in non-recurring revenue
and expenditures. This Summary Budget section
lays out the FY02 Budget and discusses trends in
each category of the summary budget table. A
detailed look at personnel trends as well as a
review of major externally funded services is also
presented. Finally, a projection of the major FY03
Budget categories will provide an informative look
ahead.

Nearly three quarters of the City’s $69.9 million
recurring revenue increase for FY02 comes from
its largest revenue source, the property tax levy.
This revenue growth provides the basis for
planning FY02 appropriations and fixed costs to
maintain a balanced budget. Selected FY02
Budgeted revenues compare with FY01 Budgeted
revenues as follows: the property tax levy (without
the overlay reserve) increases $53.1 million or
5.8%; excises are flat with a minor increase of
0.3%; interest on investments decreases one-half
million dollars or -2.8%; miscellaneous department
revenue increases $1.5 million or 4.5%; licenses
and permits increase $700,000 or 2.9%; and state
aid increases $12.2 million or 2.5%.

On the expenditure side of the budget, total
departmental appropriations, including $1.9
million in non-recurring expenditures, increase by
$39.3 million or 2.8% and fixed costs increase by
$18.4 million or 6.1%. Selected budgeted FY02
appropriations compare with budgeted FY01
appropriations as follows: city departments ,
excluding nonrecurring expenditures, increase $19
million or 2.7%; the Boston Public Health
Commission increases $400,000 or 0.7%; county
appropriations have decreased by $1.7 million or
25.9%, based on the assumption that the City’s
maintenance of effort requirement for the Sheriff's

Summary Budget

TEACHERS STATEAID
PENSIONS 28.1%
2.3%

FINES 3.3%
OTHER
REVENUE
9.3%
NET EXCISES
PROPERTY 4.7%
TAXLEVY
52.3%
FY02 Estimated Recurring
Revenue
Figure 1
ers PENSIONS
7.4%
6.9%
STATE rilicat
ASSESS
3.8%
SCHOOL
CITYDEPTS DEPT

41.3%

PHC
3.5%

FY02 Estimated Expenditures
of Recurring Revenue

Figure 2

Department will be reduced from 6.875% to 5% of
the total Sheriff's budget; and the School
Department increases $24.6 million or 4.0%.
Budgeted FY02 fixed costs compare with budgeted
FY01 fixed costs as follows: pensions increases $3.5
million or 2.7%; debt service increases $14.6
million or 13.6%; and state assessments increase
$400,000 or 0.6%. (Figure 2.)

CITY OF BOSTON
BUDGET SUMMARY

(Dollars in Millions)

FY99 FYOO FYO1 FYO2
Actual Actual Budget Budget
REVENUES

Property Tax Levy B22 866.21 OTVe7S 970.89

Overlay Reserve (42.71) (41.23) (43.91) (46.23)
Excises 68.02 68.91 82.10 82.35
Fines 47.48 55.94 58.43 59.27
Interest on Investments 17.42 21.89 20.00 19.45
Payments In Lieu of Taxes 26.55 18.89 21:20 21.62
Urban Redevelopment Chapter 121A 36:511 aT Aste, 37.94 38.84
Misc. Department Revenue 44.18 36.01 Shap ey 36.86
Licenses and Permits 20.88 28.63 24.35 25.06
Penalties & Interest 1k? 10.62 10'65 10.73
Available Funds 3.09 6.67 ihlsts. 11.78
State Aid 457.34 474.93 485.22 497.38
Teachers Pension Reimbursement S226 Sos/5 39.00 41.40
Total Recurring Revenue 1,549.43 1,623.86 1,699.66 1,769.58
Non-Recurring Revenue 0.00 0.00 14.00 1.88

Total Revenues 1,549.43 1,623.86 1:713.66 PA & 46

EXPENDITURES

City Departments } 656.80 Omit, 724.99 7132.24
Public Health Commission orOU O24 62.14 62.55
County 7.86 6.12 ee 4.84
School Department 543.37 579.18 611.94 636.56
Reserve for Collective Bargaining 2.00 8.50 6.22 15.02
Total Appropriations 1,263.54 1,323.59 Tia eZ 1,451.17
Pensions {PAG 7hs, 128.59 127.48 130.94
Debt Service 92.32 96.48 107225 121.84
State Assessments Cora i 66.99 SY £4 67.54
Reserve 0.00 0.00 0.00 0.00
Total Fixed Costs 278.14 292.07 301.84 320.29
Total Expenditures 154 -OOmesO4oLDO 197 13266 1,771.46
Surplus (Deficit) TAT pat Be20) 0.00 0.00

Numbers may not add due to rounding

Summary Budget

REVENUE

Consistent revenue growth has allowed the City to

record 15 consecutive operating budget surpluses
through FY00. Strong revenue growth in FY01 has
again, put the City in a position to show another
surplus. (Figure 3.)

Millions

91 92 "93 94 '95 "96 97 98 '99 '00
Surpluses
FY91-FYOO

Figure 3

The FY02 Budget is balanced on the following
revenue projections.

Property Tax Levy

A detailed discussion of the property tax levy is
provided in the Revenue Estimates and Analysis
chapter of this volume. Below is a brief summary.

The property tax levy has been the City’s most

dependable source of major revenue growth during

the past seventeen years. The increases were
steady and consistent from FY85 to FY01, ranging
from $28 million to $52 million. However, because
of the increasing property tax levy base, the $29.9
million increase in FY85 represented an 8.9%
increase, while the $51.9 million increase in FY01
represented only 6.0% growth. Property tax levy
growth is fundamental to the financial health of
the City since it provides over half of all City
revenue.

Proposition 2 1/2 has been the overwhelming
factor affecting the City’s property tax levy since
being passed in 1980. Proposition 2 1/2 limits the
property tax levy in a city or town to no more than
2.5% of the total fair cash value of all taxable real

Summary Budget

and personal property. It also limits the total
property tax levy to no more than a 2.5% increase
over the prior year’s total levy with certain
provisions for new growth and construction.
Finally, Proposition 2 1/2 provides for local
overrides of the levy limit and a local option to
exclude certain debt from the limit. The City of
Boston, however, has not voted to either override
the levy limitations or to exclude any debt from
the limit.

In each year since FY85, the City has increased its
levy by the allowable 2.5%. During these same
years, the levy has also been positively impacted by
taxable new value. Taxable new value is expected
to be $30.2 million in FY02. The combined effect of
the allowable 2.5% increase and the taxable new
value is an average annual levy increase from FY98
through FY01 of $42.2 million or 5.2%, and a
projected increase in FY02 of $53.1 million or 5.8%.
The property tax levy totaled $822.4 million in
FY99, $866.2 million in FY00, and $917.7 million in
FY01. The property tax levy is estimated to be
$970.9 million in FY02.

Property values in Boston have been rising
steadily. During FY01, the City conducted the
seventh parcel-specific revaluation that
established values as of January 1, 2000 at $50.5
billion, an increase of 26% over the prior year’s
market indexed valuation of $39.9 billion. (Figure
4.)

Billions

$60

$30

$20

2.93 04 9% GE 97 "98 “3 00 i

Total Assessed Property Value

FY92-FYO1
Figure 4

Excises

The Commonwealth imposes an excise on the
registration of motor vehicles, the proceeds of
which are received by the municipality of
residence of the registered owner of each vehicle.
The excise is a uniform rate of $25 per $1,000 of
vehicle valuation. Valuations are determined by a
statutory depreciation schedule based on the
manufacturer’s list price and the year of
manufacture. As employment and consumer
confidence increased over the past few years, more
people returned to the market for new cars.

Motor vehicle excise revenue totaled $29.4 million
in FY99 and $37.0 million in FY00. The City
expects motor vehicle excise revenue to come in
well above the midyear budget estimate of $37.0
million in FYO1 and climb to $40.0 million in FY02.

The local room occupancy excise amounts to 4% of
the total amount of rent for each hotel or motel
room occupancy (in addition to the state excise).
Boston’s occupancy and average room rates are
among the highest in the country and the most
recent data on tourism continues to show an
increasing number of visitors coming to Boston.
The growth of this revenue source tends to mirror
the economy. As the economy grew stronger over
the last few years, room occupancy excise receipts

Millions
$90

$80

$70

$60

$50

$40

$30

$20

93 '94 95 "96 '97 98 99 00 01 02
Excise Revenue
FY93 - FY02

Figure 5

increased steadily; room occupancy excise revenue
totaled $22.8 million in FY99 and $23.9 million in
FY00. The City’s room occupancy excise tax
receipts are expected to reach the midyear budget

estimate of $25.2 million in FY01 and are projected
at $25.8 million in FY02.

Room occupancy excise revenue from the
significant number of new hotel rooms planned,
already in construction, or recently constructed is
earmarked to pay a significant portion of the City’s
planned debt for the new Boston Convention and
Exhibition Center. Therefore, future growth in
room occupancy excise in the general fund
depends strictly upon increases in room rates and
room occupancy in the 1997 base of hotel rooms.

The excise on the sale of jet fuel is 5% of the sales
price, but not less than five cents per gallon. One
reason that the jet fuel excise has tended to
increase slowly is that with jet fuel selling
consistently below $1.00 per gallon, the five cents
per gallon minimum tax has generally been the
operative rate. Another underlying factor that
limits jet fuel excise growth is the increased fuel
efficiency of commercial aircraft that use Logan
Airport. Because fuel is such a major portion of
their expenditures, airlines have steadily improved
the fuel efficiency of their fleet. Since FY97, an
increase in air traffic has begun to cause an
increase in the sale of jet fuel. Jet-fuel excise
revenue totaled $15.5 million in FY99, an increase
of 2.6%. In FY00 jet-fuel excise totaled $7.6 million
due to a late payment by the Department of
Revenue whom collects the tax. The City expects
this revenue source to come in significantly above
the midyear projection of $19.6 million in FY01
(including the late payment from the prior year)
and projects $15.8 million in FY02. (Figure 5.)

Fines

Over the last three years, the City has issued an
average of 1.62 million parking tickets per year
and has for several years maintained a high rate of
collection on its tickets. The major factors
contributing to the City’s successful collection rate
include non-renewal of violator’s registrations and
licenses by the Registry of Motor Vehicles until
penalties are paid, booting and towing of vehicles,
increased ability to get fine payments from rental
agencies, and systematic collection of fines for
company cars. The City collected parking fine
revenue of $45.1 million in FY99 and $53.6 million
in FY00. The unusually large increase between
FY99 and FY00 is largely due to a fine increase, the
first major increase since FY91. Parking fine

Summary Budget

revenue is expected to fall slightly short of the
mid-year budget estimate of $56.1 million in FYO1.
The FY02 projection of $56.3 million is based upon
a planned diversion of traffic enforcement
personnel to the Mayor’s Lets get Moving
campaign to clear congested city streets during
peak traffic hours coupled with the higher parking
fines put in place at the beginning of FY00 and an
expansion of regular street cleaning routes to new
neighborhoods.

Interest On Investments

In general, the City’s level of investment income is
a function of the level of prevailing short-term
interest rates and daily cash balances. Cash
balances have been rising steadily for the last 3
years while interest rates had been steady but
have been fluctuating over the past year and are
expected to continue to do so as the Federal
Reserve adjusts interest rates to keep the economy
out of recession. Interest income totaled $17.4
million in FY99, $21.9 million in FY00, and is
expected to easily exceed the conservative
midyear budget estimate of $20 million in FY01. As
the Federal Reserve continues to lower short-term
interests through the first half of the fiscal year,
the City projects interest income to be $19.5
million in FY02 as a result.

Payments In Lieu of Taxes

Payments in lieu of taxes (PILOT’s) are payments
made by tax-exempt institutions located in the
City, including hospitals, universities and cultural
institutions, as a voluntary contribution for the
municipal services that the City provides to them
such as police, fire and snow removal. The
Massachusetts Port Authority will provide almost
half of the PILOT revenue the City expects in
FY02. Growth in PILOT’s comes from new PILOT
agreements, contract escalations that adjust the
payments for inflation, or re-negotiation of a
current contract. Recently, several previously
negotiated contract escalations have taken place
or are due to occur in FY02. Payments in lieu of
taxes totaled $26.5 million in FY99 and $18.9
million in FY00. When a building is sold by a tax-
exempt entity to a taxable entity a Section 2C
payment in lieu of tax is made for the period
between the sale date and the date that the
building goes on the tax rolls. In FY99, a Section
2C payment of $5.4 million was made as a gap
payment in lieu of tax on the sale of a large office

SuUe me mit ante Yau Gl Undp Ov EFL

building sold by a tax-exempt entity, accounting
for the high amount of total PILOT revenue in that
year. The City expects this revenue source to come
in slightly below the midyear budget estimate of
$21.2 million for FY01 and has projected $21.8
million for FY02.

Urban Redevelopment Chapter 121A

The Chapter 121A legislation allows local
governments to suspend the imposition of property
taxes at their normal levels in order to encourage
redevelopment. In recent years, the City used this
mechanism to encourage development of the
Seaport Hotel and the World Trade Center office
buildings. Chapter 121A revenues are based on two
separate sections of the law as described below.

The Urban Redevelopment Corporation excise is a
municipal excise in-lieu-of-tax for which the
Commonwealth acts as the collector and
distributor. In most cases, the formula for the
121A, Section 10 excise in-lieu-of-tax is $10 per
$1,000 of the current fair cash value plus 5% of
current gross income. In FY99 and FY00, the City
received Chapter 121A, Section 10 distributions of
$27.1 million and $27.3 million. In FY01 and FY02,
Chapter 121A Section 10 revenues are budgeted at
$28.0 million and $28.7 million, respectively. In
addition to the Section 10 payments collected by
the Commonwealth described above, most 121A
corporations have individual Section 6A
agreements with the City that result in additional
payments made directly to the City. These Section
6A agreements are complex, with actual amounts
owed dependent on a formula that varies widely
among the 121As. The City collected Section 6A
payments of $9.4 million in FY99 and $10.4 million
in FY00. The City expects FY01 Section 6A
collections to be in line with the midyear budget
estimate of $9.9 million and has a budget of $10.1
million for FY02.

Miscellaneous Department Revenue

This category contains twenty-one large accounts
and many more small accounts. The largest
revenue source in this revenue category is
municipal medicaid reimbursements for school
health services. This federal reimbursement,
administered by the state, began in FY94. The City
received $15.6 million in FY99 as payments caught
up after a backlog. Collections totaled $10.9
million in FY00. Municipal medicaid

reimbursement is expected to exceed the midyear
budget estimate of $8.4 million in FY01, and is
budgeted at $12.0 million in FY02. There are three
other accounts in this revenue category that are
projected to exceed $2.5 million in FY02. Fire
service fees are projected at $2.8 million, street
and sidewalk occupancy fees are projected at $3.0
million, and fringe benefit & indirect grant
allowances are projected at $3.3 million. Fringe
benefit & indirect increases considerably this year
due to administrative costs associated with grants
moving to general fund revenue.

Licenses and Permits

The level of economic activity largely determines
the level of many types of permitting and licensing
done by City agencies. This category is dominated
by building permit revenue, from which the City
received $11.4 million and $18.5 million in FY99
and FY00 respectively. Building permit revenue
should easily exceed the midyear budget estimate
of $14.0 million in FY01. The City expects to
receive $15.0 million in building permit revenue in
FY02.

The next highest license and permit revenue is the
cable television license fee from which the City
received $2.6 million in FY99 and $2.8 million in
FY00. The City has a budget of $2.9 million for
FY01 with no significant growth expected in FY02.

Alcoholic beverage licenses are the only other
revenue source in this category that regularly
exceeds $2 million in annual revenue. Alcoholic
beverage licenses are budgeted at $2.3 million in
both FYO1 and FY02. These budgets follow actual
revenue of $2.3 million in both FY99 and FY00.

Penalties and Interest

Taxpayers are assessed both a penalty and interest
for late payments of property tax bills and motor
vehicle excise bills. The City collected $11.0
million and $10.6 million in such penalties and
interest in FY99 and FY00 respectively. Actual
penalty and interest collections for FY01 fall short
of the current midyear budget estimate of $10.7
million. The City expects collect $10.7 million in
penalty and interest revenue in FY02.

Available Funds

Available funds are linked to a separate category
of expenditure appropriation, that is,
appropriations that are supported by immediately
available special fund transfers. Most of the City’s
general fund budget is raised and appropriated
from the tax levy, which means it is supported by
the revenues that are estimated to come in during
the course of the fiscal year. This includes the
property tax levy, excises, state aid and the various
other categories of revenues described above. The
only two significant available funds that the City
budgets each year are parking meter revenues to
support the Transportation Department, and
cemetery trust monies which are used to support
the City’s maintenance of its public cemeteries.
The City transferred a total of $3.1 million and $6.7
million from these two sources combined in both
FY99 and FY00 respectively. The City expects to
transfer $10.0 million from the Parking Meter
Fund to the General Fund in both FY01 and FY02.
The City also plans to transfer $1.7 million from
the Cemetery Trust Fund to the General Fund in
FY01 and $1.8 million in FY02. These monies were
available at the beginning of FY01 and also will be
available at the beginning of FY02. Both of these
special funds have fees collected during the course
of the year. By transferring out less than what is
collected, the City has built up these special fund
and trust fund balances. Trust fund balances can
also benefit from the opportunity to invest in
securities offering a higher return than short-term
fixed-income investments (see Financial
Management section of Volume | for detail).

State Aid

A detailed discussion of state aid is provided in the
Revenue Estimates and Analysis chapter of this
volume. Below is a brief summary.

Over the last ten years, the Commonwealth has
been successful in balancing its budget. This has
given the Commonwealth the capacity to support
and diversify the local revenue base for
municipalities. This had served to reduce local
reliance on property tax as a steady revenue base
during earlier years of state aid fluctuations. But
recently growth in state aid has slowed and
municipalities are again more reliant on property
tax for growth than before. The primary forms of
local aid distributions from the state to municipal

Summary Budget

general revenues are Chapter 70 education aid,
additional assistance and lottery. The amount of
these funds to be distributed each year to an
individual community is described on the “cherry
sheet”, a listing of a city or town’s local aid that is
printed on cherry-colored paper. Also listed on the
cherry sheet are other relatively smaller
Commonwealth programs such as library aid,
school construction and transportation
reimbursements, and highway funds.

The Governor’s budget for FY02 increases
statewide education aid by $171 million, an
increase of 5.8% over FY01. The City received
Chapter 70 education aid totaling $178.2 million in
FY99 and $186.2 million in FY00 and will receive
$197.5 million in FY01. The City has a budget of
$205.6 million in FY02, an increase of 4.1%. FY00
was the last year of the statutorily established
funding schedule for education reform. There has
yet to be established a post-FY00 funding
schedule. A vital component in the City’s delivery
of quality public education in the near-term is
strong financial support from the Commonwealth.

The current education aid is delivered in tandem
with state-mandated costs for charter schools.
Charter schools are publicly funded schools
administered independently from local school
committee and teacher union rules and
regulations and whose charters are granted by the
State Board of Education. There are two kinds of
charter schools, the Commonwealth charter school
and the Horace Mann charter school. The former
is a school outside the local public school system
and the latter is part or all of a school in the public
school system. In addition to the Board of
Education, the local school committee and local
bargaining agent must approve Horace Mann
charter schools. In addition, Horace Mann charter
schools budgets remain part of the public schools
budget.

There are nine Commonwealth charter schools
currently operating in Boston, three outside
Boston available to Boston residents, and one
more is scheduled to open in Boston in September

Summary Budget

2001. In addition to the Commonwealth charter
schools, there are also two Horace Mann charter
schools operating in Boston. There are currently
2,602 Boston resident students attending charter
schools.

Before FY99, all charter school tuition was drawn
directly from the City’s Chapter 70 aid. This draw
on the City’s education aid totaled $10.9 million in
FY98. Under recent amendments to the charter
school law, the Commonwealth will pay to the City,
as reimbursement for Chapter 70 aid reductions,
100% of tuition for new charter school students the
first year, followed by 60% of tuition and tuition
increases the second year, 40% of tuition and
tuition increases the third year and 0% of tuition
and tuition increases the fourth year. The net
impact of the charter schools in FY00 was $12.1
million after a $5.2 million reimbursement from
the Commonwealth. The City has budgeted $14.1
million to be the net impact of the charter schools
in FY01 after receiving a $10.5 million
reimbursement from the Commonwealth. The City
expects $18.0 million to be the net impact in FY02
after a $10.5 million reimbursement, this assuming
current law rather than the Governor's budget
proposal to reduce reimbursement to 50% of
charter school tuition in the first year only. If the
Governor's proposal were to become law, the net
impact of charter schools would increase to $26.4
million in FY02. In the long term, it is assumed
that the charter schools that thrive will increase
overall enrollment, which in succeeding years will
increase funding for the school district in the
Chapter 70 formula and mitigate the negative
fiscal impact of charter schools on the City’s
traditional public schools.

Lottery aid for the City, as for most municipalities,
has grown steadily the last few years as a result of
a state decision to phase-out the lottery cap and
return all lottery profits to the cities and towns.
The City’s lottery aid was $55.6 million in FY99 and
$63.1 million in FY00. The City expects that FY01
lottery aid will meet the budget estimate of $60.4
million with an additional $4.0 million
supplemental lottery aid distribution possible. The
City expects to receive $64.4 million in lottery aid
in FY02. The current lottery formula is not
favorable for the City. The City receives a smaller
percentage share of lottery aid than its share of
the state population, and dramatically less than
the share of lottery proceeds derived from sales in

Wee

Boston. Nevertheless, lottery aid has been an
important source of revenue growth, aiding the
City’s efforts to sustain adequate municipal
services. During the last four years, Boston’s
lottery distribution has reflected both lottery profit
growth and the phasing out of the diversion of
lottery funds to the Commonwealth. However,
beginning in FY01, growth in the City’s lottery
distribution reflects only profit growth of the
lottery.

Teachers’ Pension Reimbursement

Boston’s cherry sheet includes an item unique to
the City, the teachers’ pension reimbursement for
pension charges to the City. The pensions paid to
retired teachers in all other cities and towns in
Massachusetts come directly from the
Commonwealth via the State-Teachers Retirement
System. In a singular arrangement mandated by
general law, pensions paid to retired Boston
teachers are paid by the State-Boston Retirement
System, which charges the City of Boston for this
cost as part of its annual pension funding. The City
is then reimbursed by the Commonwealth through
the cherry sheet. In short, the Boston teachers’
pension payroll is administered locally, but, as
with all other teachers’ pensions in Massachusetts,
is the financial responsibility of the
Commonwealth. The teachers’ pension
reimbursement totaled $37.3 million in FY99, $38.8
million in FY00, and has already come im at $41.3
million in FY01. The teachers pension
reimbursement is estimated at $41.4 million in
FY02. The city could face the loss of this
reimbursement in the future while retaining the
liability for its teacher’s pensions if the language
in the FY02 House Budget is enacted.

Non-recurring Revenue

Included in the FY02 Budget is $1.9 million in non-
recurring revenue to be transferred from the
surplus property disposition fund. The original
source of these funds is the proceeds from the sale
of central artery land to the Commonwealth for
the central artery project. In maintaining its policy
of not supporting recurring operating costs with
non-recurring revenue, the City is limiting this
transfer to an amount not greater than $1.0 million
for the Risk Retention Reserve plus $876,000 for a
one-time cost associated with after school

programs. (see Financial Management section of
Volume I for more detail on this revenue source. )

EXPENDITURES

Expenditures are broken down into two primary
groups: appropriations directly related to
departmental services and fixed and mandated
costs. FY02 appropriations are further subdivided
into five categories:

City Departments, which includes all operating
department appropriations, a risk retention
reserve and a set-aside for tax title and annual
audit expenses;

Boston Public Health Commission, the City
appropriation for the quasi-independent authority
and successor to the Department of Health and
Hospitals;

County, which includes the City of Boston’s share
of the operating budget for the Suffolk County
Sheriff and the County share of Pensions and
Annuities for payments to retired County officials
who were not members of the contributory
retirement system;

School Department, the City appropriation for the
Boston Public Schools;

Reserve for Collective Bargaining, an
appropriation for outstanding labor agreements.

City Departments
The combined appropriations for City
Departments as shown in the FY02 Summary

HOUSING& ENVIRON

NEIGHBOR- — SERV
ECON DEV

0.2%

BASICCITY
SERV
10.1%
COO
8.5%

MAYOR
0.7%

EDUCATION
44.4%

FY02 Expenditures by Cabinet

Figure 6

Summary Budget

Budget have increased by 1.0% over the FY01
appropriations. Nearly 70% of this category covers
four appropriations: Police, Fire, Public Works and
Health Benefits. The Police Department's
appropriation will increase by $4.9 million, or 2.3%.
The increase is mainly driven by civilian collective
bargaining increases and educational incentive
payments to be made to eligible police officers as
prescribed by M.G.L. c. 41s. 108L (the “Quinn
Bill”). The City accepted the provisions of the
Quinn Bill as part of the collective bargaining
agreement with the Boston Police Patrolmen’s
Association and as part of arbitration awards for
the Boston Police Detectives Benevolent Society
units (Detectives and Detective Superior Officers)
and the Superior Officers’ Federation. The Fire
Department will increase by $1.52 million, or 1.3%.
As of the date of passage of the City’s FY02 Budget,
the City and the Firefighters union, Local 718 had
yet to reach a successor agreement to the
collective bargaining agreement that expired on
June 30, 1999. Salaries for members of that union
as shown in the Fire Department’s budget do not
include collective bargaining increases. Public
Works will see an increase of approximately $1.1M
or 1.7%. Health Benefits will increase by 12.6%
over the FY01 appropriation, requiring an
additional $11.3 million. The FY02 Health
Benefits appropriation will include the cost of a
full year of dental and vision coverage for
employees who are eligible for coverage through
collective bargaining agreements or executive
order.

Appropriations can also be divided by cabinet, to
better reflect the overall policy priorities and
trends by service area. (Figure 6.)

Some of the highlights of FY01/FY02 changes by
cabinet are as follows:

Mayor's Office

The cabinet will see a very slight decrease of .4%.
The virtual net level funding in the cabinet as a
whole is the result of a reduction in the amount
appropriated for outside contracts in the Law
Department. In FY02, the Office of New Bostonians
will receive a general fund appropriation to cover
the full salary of the Director. This will free up
Baxter Fund resources to help address the Mayor’s
commitment to helping new immigrants become
proficient in the English language so that they can
use the skills that they already have to enter the

Summary Budget

City’s job market. Other Mayoral departments will
see increases mainly as the result of collective
bargaining increases occurring during FY02.
Boston 2:00 to 6:00 will be working closely with
Boston Community Centers (BCC) on a new
initiative that will focus on improving and
expanding BCC after-school programs in
partnership with the Boston Public Schools. The
City’s General Fund resources currently are being
stretched to the limit making the work of the
Grants Administration program of
Intergovernmental Relations, as it seeks to
maximize the City’s access to external funding
from state, federal and private sources,
particularly important.

Chief Operating Officer

Excluding health insurance, this cabinet will see a
slight decrease in its FY02 appropriation. The
majority of the decrease relates to the elimination
of the Management Fund appropriation. With
limited resources available the Administration has
decided to redirect the funding historically used
for this discretionary fund to more basic city
services. The largest increase in this cabinet will
go to the Graphic Arts Department to allow the
transfer of two employees from the Library’s
bindery operation to Graphic Arts. The Library
Bindery has been phased out as a result of the
City’s effort to streamline its bindery operations by
consolidating the City run portion of the Library
work in Graphic Arts. The City will continue its
investment in technology; the Management &
Information Systems (MIS) budget includes
funding for the City’s hardware and software needs
as well as in-house technical support for all
departments.

Chief Financial Officer

After excluding tax title funding from the FY01
appropriation, the net percentage increase in this
cabinet is 8.7%. The net increase is solely due to
the large increase in the Auditing Department’s
budget. The Auditing Department plays a major
role in the support of the City’s financial/human
resource/payroll system (the BAIS project); this
appropriation will allow the Auditing Department
to continue to fulfill that role in FY02.

Public Safety

The majority of the increase in this cabinet is
related to the Police Department’s education
incentive payments to be made pursuant to the
Quinn Bill and civilian collective bargaining
agreements. The Police Department’s
appropriation includes the cost of a class to be
added in the second half of FY02. The class will
allow the department to continue to provide an
appropriate level of staffing. During FY00 the
Mayor appointed a commission (the “O’Toole
Commission”) to review the operations and
organization of the Fire Department. The FY02
Fire Department Budget will allow the department
to continue to address the recommendations made
in the O’Toole Commission report. The FY02
Budget also contains funding for a class of
firefighters at the start of FY02 to replace
employees lost through retirements.

Economic Development

This cabinet will show a significant decrease in
total appropriations from those funds appropriated
in FYO1. In FY02 the general fund budget will not
include an appropriation for the Boston
Redevelopment Authority (BRA). The City’s
commitment to centralizing planning for the City
within the Boston Redevelopment Authority will
be funded fully with BRA revenues in FY02. The
increase in the request for the Minority/Women
Business Office includes funding to begin a study
that will include the demographics of the 2000
Census and the impact, if any, on business
practices in the City. The study will be conducted
in partnership with other agencies such as the
Boston Housing Authority and the Boston Water &
Sewer Commission.

Basic Services

After excluding the state funding included in the
FY01 Library appropriation, the combined
appropriations for this cabinet show a slight net
increase. The most significant percentage
increases in this cabinet occur in the Parks
Department and Consumer Affairs and Licensing
with both at approximately 6%. Funding has been
reallocated to Parks to allow the department to
continue its strategic planning and collaboration
with Community Centers and other organizations
to ensure that the recreation services being

delivered by the City are of the highest quality and
that those services are being delivered in the most
cost effective manner. The Parks Department
Budget also includes the annualized cost of
staffing for Millenium Park. The Mayor’s Office of
Consumer Affairs & Licensing will continue
partnering with various City Departments,
including Police, Inspectional Services and the
Department of Neighborhood Development
(DND), on the Home Improvement Contracting
and Deceptive and Fraudulent Auto Dealership
programs begun in FY01 as well as begin a new
Face to Face Mediation Program. The Library
opened a new branch in Allston this past June; the
appropriation for FY02 includes funding for a full
year of operations for the Allston Branch. Also of
note in this cabinet is the significant decrease in
the Youth Fund appropriation. The decrease is
solely related to the fact that a $2.2M
supplemental appropriation was approved for the
Youth Fund in FY01 to cover the shortfall in state
funding for the Summer Jobs program. The FY02
Youth Fund appropriation assumes that the final
State budget will show a renewed commitment to
the City’s youth and will restore funding for the
City’s summer jobs program reducing the general
fund appropriation needed for the Youth Fund.
The City’s summer job program in FY02 will
include an education component that will require
students to work on basic math, reading and
writing skills each day before they begin working a
regular job. The Youth Fund appropriation also
provides centralized funding for the support of the
Mayor’s Youthline.

Environmental Services

The majority of the $1.2 million increase is split
between the Transportation Department and the
Inspectional Services Department. Collective
bargaining increases and inflationary increases in
fixed costs are driving the increases in both
departments. The focus of the Transportation
Departmental will continue to be maintaining
public safety (with a particular emphasis on
neighborhood traffic safety), traffic flow and
parking turnover. Along with all of its mandatory
inspection activities, the Inspectional Services will
continue the Home Improvement Contracting
Program in FY02 in partnership with Consumer
Affairs & Licensing and the Department of
Neighborhood Development.

SU mim any Bauvdsovet

Human Services

The Elderly Commission will be allocated
additional funding in FY02 — an 8.2% increase over
the FY01 appropriation. The Commissioner
continues to look at re-inventing the way the
department provides services, especially in
response to the information gathered through
“Seniors Count” — the Commission’s citywide
outreach effort to seniors 65 and older. Efforts to
improve community relations and public
information dispersal as well as to increase
partnerships with the private sector will continue
in FY02. The department will also focus on
intergenerational programs. In the area of
improving direct customer service, the
Commissioner has proposed the utilization of a
new Senior Shuttle tracking and scheduling
system that will improve the Commission’s
dispatching capabilities and decrease downtime of
drivers. In order to begin shifting the mission of
Boston Community Centers away from recreation
and more toward education, the FY02 Budget
includes $1M to fund a new initiative to address
the Mayor’s goal, as articulated in his State of the
City address, to put the City’s 2:00 to 6:00 After
School programs in every Community Center,
linking them to the Boston Public School
curriculum.

Housing and Neighborhood Development
This cabinet is showing a very slight increase from
the FY01 appropriation, net of the Leading the
Way appropriation that is supported by
nonrecurring revenue. The Department of
Neighborhood Development (DND) continues to
streamline its administrative operations to achieve
savings and redirect its existing resources toward
addressing the Mayor's commitment to community
renewal and public investment in the City’s
neighborhoods. The Department continues to
strive toward making the Mayor's affordable
housing production goals a reality. The Mayor is
committed to funding a Leading the Way
appropriation in FY02 once the revenue from the
sale of the former Police Headquarters building is
realized. (see Surplus Property Disposition Fund
in Financial Management section of Volume I.)

Public Health Commission

The Commission is responsible for providing the
public health operations formerly provided by the
Department of Health and Hospitals (DHH) and

Summary Budget

Trustees of Health and Hospitals (THH). It is a
principal component of the Boston Public Health
Network which includes the Public Health
Commission, Community Health Centers, and
Boston Medical Center. Through Boston
Emergency Medical Services, the Commission also
provides pre-hospital emergency care.

The FY02 appropriation for the Public Health
Commission shows an increase of .7%. However,
the Public Health Commission Budget covers a $12
million direct payment to the Boston Medical
Center (BMC) required by the agreement reached
when the City consolidated Boston City Hospital
and Boston University Medical Center Hospital.
Since FY02 marks the sixth year post-merger, the
payment to BMC has been reduced by $1M as a
payment for non-recurring consolidation costs
that was required in the first five years following
the merger will no longer be necessary. Comparing
the FY02 appropriation request to the FY01
appropriation net of that $1M payment yields a
2.3% increase in FY02. The appropriation funds an
Emergency Medical Services (EMS) subsidy of
$8.1 million. In addition, the FY02 appropriation
funds initiatives critical to the health of Boston’s
youth and adult populations including an
expansion of mental health programs and new
programs to assist families transitioning off
welfare. The Public Health Commission will also
launch a partnership with other city agencies to
combat heroin use and improve access to
substance abuse treatment.

County Departments

Prior to FY93, state support of county corrections
for Suffolk County was by means of state aid into
the City’s general fund. In FY93, the
Commonwealth shifted its support of county
corrections from the City’s general fund to directly
funding the Sheriffs Department. In FY96, the City
was responsible for funding 12.5% of the Sheriffs
Department Budget with the Commonwealth
funding the rest. Because this was close to double
the percentage of the FY96 statewide local
contribution over statewide county corrections
spending, the City received a reduction for FY97 to
8.75% of the Sheriff's Budget and a subsequent
reduction in FY99 to 6.875%. The City strongly
favors a continuation of the trend toward a fairer
level of local contribution to the Sheriff's
Department. Based on the most current

1.9

information on the status of the State budget, the
FY02 Budget for the Sheriff's Department assumes
the City’s maintenance of effort requirement, will
be lowered to 5%.

School Department

The FY02 School Department Budget contains a
4% increase from the FY01 appropriation,
increasing by $24.6 million. The FY02 Budget
request allows for increases in fixed costs,
inflation, and salary adjustments. The School
Department will continue to implement the School
Committee’s Five-year Education Reform Plan, A
Focus on Children.

The FY02 Budget also includes substantial
resources to sustain and expand the Transition
Program and Math Support Plan, class size
reductions at all schools, support for developing
small learning communities in high schools and
funding for instructional materials in art. (See
the Education chapter of this volume for more
details. )

Reserve for Collective Bargaining

A collective bargaining reserve has been
established as a provision for the cost of unsettled
collective bargaining agreements for City
departments.

Pensions

The City’s pension expense has increased modestly
over the last several years. The City’s annual
pension funding requirement was $120.3 million in
FY99, $128.6 million in FYO0 and $127.5 million in
FYO1 (after the July 2000 revaluation). The City
expects the FY02 pension funding requirement to
be $130.9 million. These numbers do not include
pension costs allocated to the budgets of the
Sheriff's Department or the Public Health
Commission. Meanwhile, the percentage of the
City’s overall pension liability that has been
funded has improved from 52.0% in FY95 to 78.9%
in FY00. There are two reasons for this. First, the
average annual rate of return on assets in recent
years has significantly exceeded the 8% rate of
return assumed in the City’s pension funding
schedule. Second, the increased percentage set
aside for pension funding which has risen from 6%
for employees hired in the early 70’s and before, to

greater than 8% for more recent hires, continues
to aid the system’s trend toward full funding.

The impact of these two items is incorporated into
the City’s pension funding schedule each time the
pension system does a full valuation. State law
calls for full valuations at least every three years.
The most recent valuation was approved during
FY01 and the pension system is therefore required
to do another full valuation during FY04.

A fundamental shift regarding the liability for
pension cost-of-living-adjustments was reflected in
the valuation of FY98. The Commonwealth no
longer funds cost-of-living-adjustments as they had
since the enactment of Proposition 2 1/2. The City
has opted to accept the responsibility for future
cost-of-living-adjustments for its retirees.

Debt Service

The City had expenditures for debt service of
$92.32 million in FY99 and $96.48 million in FY00.
The City has a budget of $107.25 million for debt
service in FY01 and expects to spend $121.84
million on debt service in FY02. The increase in
debt service in recent years reflects the increasing
amounts that were borrowed in FY99 ($120
million), FYO0 ($120 million), and FY01 ($120
million) and planned for in FY02 ($100 million).
The higher borrowing level is a consequence of
increased capital renovations and planned new
construction for the Boston Publie Schools, which
is partially reimbursed by the Commonwealth.
FY02 gross debt will be slightly above the City’s
traditional guideline of 7% of total expenditures.
For further detail see the Capital Planning and
Financial Management chapters of this volume.

State Assessments

Accompanying the local aid distributions on the
cherry sheet are several charges to the City from
the Commonwealth. All but the state assessment
for the Massachusetts Bay Transportation
Authority (MBTA) are relatively small. In
accordance with Proposition 2 1/2, these charges,
on a statewide basis, cannot increase annually by
more than 2.5%. The City’s state assessment
actually declined from $67.1 million in FY00 to an
estimated $66.7 million in FY01 due to reduced
costs in some of the smaller assessments. The City

Siu mim airiyv> Biuldio lect

Appropriations by Cabinet

FY99 FYOO FYO1 FY02 Inc/(Dec)

Department Expenditure Expenditure Appropriation Appropriation 02 vs 01

Mayor's Office Boston 2 to 6 366,996 544,013 567,068 567,514 446
Intergovernmental Relations 871,263 916,200 947 588 994,255 46,667

(1) Law Department 3,757,260 3,875,695 5,288,392 5,130,858 -157 534

Mayor's Office 1,788,826 1,793,242 1,882,159 1,874,040 -8,119

Neighborhood Services 881,962 947,138 1,082,286 1,114,761 32,475

Office of New Bostonians 0 0 39,600 77,685 38,085

Public Information 779,232 786,774 884,341 887,027 2,686

Total 8,445,539 8,863,062 10,691,434 10,646,140 -45 294

Chief Operating Officer Chief Operating Officer 840,958 822,527 1,016,529 988,226 -28,303
Graphic Arts Department 1,292,205 1,379,746 1,504,855 1,613,268 108,413

Health Insurance 75,011,348 78,846,781 89,430,000 100,731,590 11,301,590

Human Resources 2,560,428 2,672,685 2,842,279 2,910,407 68,128

Labor Relations 897,349 1,041,811 955,920 908,033 -47 887

Management & Information Svs 9,081,634 9,240,418 11,034,699 11,045,586 10,887

Management Fund 225,000 225,000 225,000 0 -225,000

Unemployment Compensation 15,659 SEL 50,000 50,000 0

Workers’ Compensation Fund 4,290,992 4,069,294 3,400,000 3,400,000 0

Total 94,215,573 98,301,981 110,459,282 121,647,110 11,187,828

Chief Financial Officer Assessing Department 5,061,740 5,321,149 5,674,442 5,305,425 -369,017
Auditing Department 1,481,524 B971,,213 3,676,734 6,316,870 2,640,136

Budget Management 2,596,867 2,240,084 2,319,483 2,319,483 (6)

Execution of Courts 8,101,946 6,202,391 4,100,000 4,100,000 0

Medicare Payments 2,928,601 3,201,330 3,113,783 3,500,000 386,217

Pensions & Annuities 6,300,000 5,933,645 6,300,000 5,965,000 -335,000

Purchasing Division 1,088,748 1,140,433 1,193,720 1,299,143 105,423

Taxpayer Referral & Assistance 364,369 379,704 460,242 438,901 -21,341

Treasury Department 3,447,204 3,303,808 3,992,445 3,401,342 -591,103

Total 31,370,999 31,693,757 30,830,849 32,646,164 1,615,310

Public Safety Fire Department 115,911,697 118,751,346 1A 78 5/112 119,098,152 1,519,440
Police Department 194,218,469 200,756,488 214,389,278 219,253,853 4,864,575

Total 310,130,166 319,507 834 331,967,990 338,352,005 6,384,015

Education Boston Public Schools 543,372,457 579,180,939 611,943,050 636,563,231 24,620,181
Total 543,372,457 579,180,939 611,943,050 636 563,231 24,620,181

Economic Development Boston Redevelopment Authority 0 8) 725,000 0 -725,000
Boston Residents Job Policy 397,893 401,336 448,354 469,335 20,981

Minority/Women Business 532,981 540,969 625,952 662,335 36,383

Special Events & Tourism 1,642,751 EW eS Ver fa Ie 1,794,255 1,270,425 -523,830

Total 2,573,625 2,414,022 3,593,561 2,402,095 -1,191 466

Basic Services Central Fleet Maintenance 1,626,522 1:063;555 2,020,785 2,075,670 54,885
Consumer Affairs & Licensing 390,754 358,346 452,602 479,677 27,075

Election Department 3,045,666 3,476,439 3,337,098 3,362,494 25,396

(2) Library Department 27,416,387 28,160,254 29,937,903 28,701,485 -1,236,418

Parks & Recreation Department 12,481,942 13,064,983 14,039,756 14,870,972 831,216

Property Management 14,858,005 15,660,725 17,933,088 17,923,249 -9,839

Public Works Department 59,393,800 63,133,179 64,569,826 65,660,154 1,090,328

Registry Division 798,528 783,064 867,842 895,802 27,960

Snow Removal 7,468,963 6,018,565 4,405,561 4,462,060 56,499

Youth Fund 4,883,153 6,199,168 8,589,738 6,408,767 -2,180,971

Total 132,363,720 138,418,078 146,154,199 144,840,330 -1,313,869

Environmental Services Environment Department 884,004 879,260 943,723 980,917 37,194
Inspectional Services Dept 11,142,824 11,270,550 12,845,346 13,307,525 462,179

Transportation Department 25,174,085 26,164,999 28,468,788 29,168,028 699,240

Total 37,200,913 38,314,809 42,257,857 43,456,470 1,198,613

Human Services Boston Community Centers 13,659,577 14,591,205 15,063,685 15,964,364 900,679
Civil Rights 278,949 382,761 466,461 434,290 -32,171

Community Partnership 1,488,910 1,704,243 1,584,269 1,627,947 43,678

Cultural Affairs 557,278 725,614 1,028,374 1,100,893 72,519

Elderly Commission 2,222,019 2,415,041 2,609,504 2,823,460 213,956

Emergency Shelter Commission 412,701 585,443 631,062 599,947 -31,115

Veterans Ser ces Department 2,138,566 2,005,224 2,605,078 2,371,400 -233,678

Women's Commission 142,705 149,370 173,662 166,156 -7 506

Total 20,900,705 22,558,901 24,162,095 25,088,457 926 362

Neighborhood Development Neighborhood Development 3,483,928 4,716,344 4,762,514 4,873,518 111,004
Leading the Way 6) ie) 13,000,000 8) -13,000,000

Rental Housing Resource Center 731,264 682,918 831,796 744,293 -87 ,503

Total 4,215,192 5,399,262 18,594,310 5,617,811 -12,976,499

Public Health Public Health Commission 53,502,504 58,212,620 62,141,493 62,550,630 409,137
Total 53,502,504 58,212,620 62,141,493 62,550,630 409,137

Non-Mayoral Departments City Clerk 773,809 806,889 867,499 893,034 25,555
(1) City Council 3,070,633 3,288,550 3,490,710 3,930,923 440,213

Finance Commission 175,740 170,914 185,892 192,316 6,424

Licensing Board 523,683 548,078 630,896 590,525 -40,371

Registry of Deeds 1,779,490 (6) 0 0 0

Suffolk County Sheriffs Dept 5,584,200 5,854,066 6,029,688 4,536,850 -1,492 838

Total 11,907,555 10,668 497 11,204,685 10,143,648 -1,061 ,037

Grand Total 1,250,198,948 1,285,143,813 1,404,000,805 1,433,954,091 29,953,286

(1) The FY02 amounts shown include supplemental appropriations passed by the City Council on July 13, 2001.
(2) The FY02 Library appropriation does not include anticipated State Library of Last Recourse funds yet to be appropriated.

Summary Budget 21

expects growth in assessments to $67.5 in FY02 as
a result of a new schedule of MBTA assessments
passed with last year’s state budget that will lower
the MBTA statewide assessment in the future. The
new schedule allows cities and towns serviced by
the MBTA to deduct the cost of operating Regional
Transit Authorities from their assessment. Since
the City has no such system and therefore no
deduction, the net effect is a higher assessment as
the City pays a higher share of a lower statewide
assessment. In the past, the cost of operating the
MBTA has traditionally grown at a much faster
pace than the allowable 2.5% increase in state
assessments and consequently so has the
Commonwealth’s annual subsidy to the MBTA.
Along with this new MBTA assessment schedule,
the Commonwealth has given the MBTA a budget
instead of covering their annual shortfalls with a
subsidy.

Reserve

The City is required by law to maintain a reserve
on its balance sheet of 2.5% of the prior year
appropriations, not including the School
Department, which has its own separate reserve.
The current balance of this reserve is $18.7
million. Due to the significant reduction in FY97 of
non-school departmental appropriations as a
result of the removal of hospital operations from
the budget, this reserve is already fully funded
through the end of FY01. The reserve can be used
to provide for extraordinary and unforeseen
expenditures and the Mayor may make drafts or
transfers against this fund with City Council
approval only in the month of June. Since the
establishment of this reserve, the City has yet to
make any drafts or transfers from the reserve.
FY02 marks the first year since FY95 the City will
be required to show an increase in this reserve to
satisfy the statutorily obligated funding level. The
City expects to fulfill the Tregor Reserve
requirement to add $1.1 million to the reserve
before the close of FY01. (see Financial
Management section of Volume I for detail.)

Note:

The City prepares its financial statements in
accordance with generally accepted accounting
principles (GAAP) and publishes them annually in
its Comprehensive Annual Financial Report

7 hs

(CAFR) and as an appendix in all bond
prospectuses issued by the City. However, the
budgetary basis accounting practices established
by the Massachusetts Department of Revenue are
used in constructing each year’s proposed budget,
during the budget approval process, and in
monitoring the budget throughout the year.
Therefore all numbers used in this budget
document are on a budgetary basis. There are no
descriptions or discussions of separate funds
because one major way in which budgetary basis
accounting differs from GAAP is that while certain
activities and transactions (e.g. debt service) are
presented in separate funds in GAAP, they are
components of the general fund using budgetary
basis accounting. For a fuller understanding of the
differences, a walk-through table demonstrating
the City’s revenue and expenditure totals for FY00
in budgetary basis accounting versus GAAP is
presented at the end of the Financial Management
chapter.

Tregor Reserve Fund

Beginning Ending

Fiscal Year Funds Funds’ Year

Year Balance In Out Balance
FY95 16-925e" 0.755 0:000 18.680
FY96 18.680 0.000 0.000 18.680
FY97 18.680 0.000 0.000 18.680
FY98 18.680 0.000 0.000 18.680
FY99 18.680 0.000 0.000 18.680
FYOO 18.680 0.000 0.000 18.680
*FY01 18.680 1.100 0.000 19.780
*FY02 19.780 0.000 0.000 19.780

Notes: ($millions), *projected

PERSONNEL CHANGES

The following table shows a four year comparison
of city funded full-time equivalent (FTE)
positions. (This includes both permanent and
emergency employees.) The numbers used for
FY02 are estimates based on the current level of
employees, current vacancies that are expected to
be filled, as well as any plans for new positions.
(It should be noted that the FTE number for BPS
in this table does not include employees out on
Long Term Leave and Workers Compensation.
The table in the Education chapter lists these
categories in the Employees by Category table. )

FY00- FY01 Changes - The total net increase of
159.3 positions from January 1, 2000 to January 1,
2001 was mainly the result of increases in the

Summary Budget

School Department. Of the 186.8 FTE increase in
the School Department, over 100 were teacher and
instructional support positions and approximately
60 were bus monitors. The increases in many of
the City departments were actually much lower
than those projected in the FY01 Budget
Document. Those lower than projected increases
were largely due to the timing of the new Police
class (added in March), a lower number of hourly
Election Department workers on the payroll in
January, 2001 (timing issue) as well as the tight
job market. The strong economy has made it
difficult for some of the basic service departments
such as Public Works to hire laborers — a key
component of their workforce.

FY01-FY02 Changes — The City expects to have
minimal FTE growth in most departments between
FY01 and FY02. Overall the increase is expected
to be 178, with over half of that growth coming in
Public Safety (mainly a timing issue) and
Education combined.

The number of positions in the Mayor's Office
cabinet is expected to increase by 4 in FY02. Of
those, 2 will be in the Boston 2:00 to 6:00 Office as
the Director fills two existing vacancies in order to
help make the Mayor's after school program goals
reality.

In the Chief Operating Officer’s cabinet, the FTE
count is expected to grow by 6. Management &
Information Services Department is projected to
grow by 2 as the department aggressively seeks to
fill current vacancies and strengthen its technical
support staff to better serve the expanding
technological needs of other departments.
Graphic Arts will increase by 2 as the Library’s in-
house bindery operations are consolidated with
the Graphic Arts Department operations resulting
in the transfer of 2 Library employees.

Almost half of the projected increase in Finance
Cabinet positions from January 1, 2000 to January
1, 2001 is the result of expected hiring in the
Auditing Department in order to fulfill its
supporting role to the BAIS project.

The numbers of Public Safety employees on the
payroll as of January 1 of any year fluctuate with
the timing of classes and to a lesser degree, the
timing of retirements. After considering the
current number of filled positions, expected
retirements and the timing of replacement classes,

Summary Budget

the net increase projected for Public Safety FTEs
is approximately 46.

{ducation is projected to increase by about 42
FTEs from January 2001 to January 2002. The
growth in positions can be attributed to two
primary factors: class size reduction and
increased support for the Transition Program and
the Math Support Plan.

The projected increase in the Basic Services
Cabinet will be the result of increases in three
departments — Library, Parks and Public Works.
The Library opened the Allston Branch library this
spring, requiring 7 additional positions. The Parks
Department added 2 new positions for Millenium
Park after January 1, 2001; another position will be
transferred to Parks from Community Centers to
work on recreation issues. The Public Works
Department will continue to try to fill essential
positions, vacant on January 1, 2001; the
projection of an increase of 21 positions is based
on the hope that the Department will be

successful.

The projected increase of 16 in the Human
Services Cabinet is largely the result of positions
that are expected to be filled in Community
Centers by January 1, 2002. In FY02 there are two
items of note that have staffing issues. The Vine
Street facility will be coming on line and will need
staffing assigned to it. In addition, 3 new positions
were included in the Department’s budget for the
new $1M After School Program Initiative. In FY02
Community Centers will be taking a hard look at
the most efficient and equitable way to staff its
Community Centers and continue to address the
Mayor's education priorities.

The Public Health Commission is requesting 17
new positions. Approximately 7 of these FTEs will
be added to the Child, Adolescent & Family Health
Bureau. The remaining 10 positions will be
scattered throughout various bureaus including
Infectious Diseases, Homeless Services and
Administration.

FTE growth in the Economic Development,
Environmental Services and Housing &
Neighborhood Development cabinets is expected
to remain relatively stable in FY02. Small
increases shown in any one department in these
cabinets are mainly the result of the timing of
filling vacancies

Personnel Summary

1/1/99 1/1/00 1/1/01 1/1/02 Projected
FTE Projected Inc/(Dec)
Office of the Mayor Boston 2 to 6 : 5.(0,

Intergovernmental Relations 10.0 10.0 8.0 10.0 2.0
Law Department 46.0 43.0 47.0 47.0 -
Mayor's Office 215 28.0 29.0 28.0 (1.0)
Neighborhood Services 19.5 20.5 23.0 23.0 -
Office of New Bostonians - - - 1.0 1.0
Public Information qlF ATS) ae 19.0 19.0 -
Total 123.5 124.0 130.0 134.0 4.0
Chief Operating Officer Chief Operating Officer 9.5 9.0 9.0 10.0 1.0
Graphic Arts 37.0 38.5 37.0 39.0 2.0
Human Resources oil te 53:5 54.0 55.0 1.0
Labor Relations 11.0 i\2as ZO 14120 -
Management Info Svcs 82.0 83.0 83.0 85.0 2.0
Total 191.0 196.5 194.0 200.0 6.0
Chief Financial Officer Assessing Department 92.0 91.0 90.0 90.0
Auditing Department Slee 58.0 52.0 60.0 8.0
Budget Management 27.0 30.0 27.6 27.6
Purchasing Division 21.0 18.0 20.0 20 1.0
Retirement Board - - - -
Taxpayer Referral & Assistance 10.0 10.0 9.0 10.0 1.0
Treasury Department 59.5 54.5 58.0 60.0 2.0
Total 261.0 261.5 256.6 268.6 12.0
Public Safety Fire Department 1,755.5 eS OLO 1,732.0 1,719.0 (13.0)
Police Department 3,024.5 3,005.0 2,958.3 3,017.0 58.7
Total 4,780.0 4,735.0 4,690.3 4,736.0 45.7
Education School Department 7,914.8 8,091.7 8,278.5 8,320.7 42.2
Total 7,914.8 8,091.7 8,278.5 8,320.7 42.2
Economic Development Minority\Women Business 8.0 8.0 8.0 8.0 -
Office of Boston RJP 9.0 9.0 10.0 10.0 :
Special Events & Tourism 9.0 8.0 9.0 9.0
Total 26.0 25.0 27.0 27.0 -
Basic City Services Central Fleet Maintenance 47.0 45.0 48.0 48.0 ‘
Consumer Affairs & Licensing 8.5 8.5 9.0 9.0
Election 57.9 64.2 44.7 44.7 -
Library Department 559.7 541.4 558.7 565.7 7.0
Parks and Recreation 244.0 ZOD 235.0 238.0 3.0
Property Management 277.0 PEAVY) 278.8 278.8 .
Public Works Department 420.5 409.5 389.0 410.0 21.0
~ Registry Division 2185 20.5 21.0 21.0 -
Youth Fund 1.0 2.0 4.0 4.0
Total 1,637.1 1,597.6 1,588.2 1,619.2 31.0
Environmental Services Environment 13.0 15.0 16.0 16.0 -
Inspectional Services 2225 225.0 237.6 237.6 -
Transportation 379.0 441.5 438.0 440.0 2.0
Total 614.5 680.0 691.6 693.6 2.0
Human Services Civil Rights 7s 6.5 8.0 8.0 -
Community Centers 378.5 383.5 370.2 382.2 12.0
Community Partnerships 8.0 11.0 12.0 12.0 .
Cultural Affairs 6.0 9.5 8.0 10.0 2.0
Elderly Commission 59.5 58.0 61.0 63.0 2.0
Emergency Shelter 4.0 6.0 6.0 6.0 -
Veterans Services 19.0 17.0 17.0 ‘WAe)
Women's Commission 2.0 3.0 3.0 3.0
Total 484.5 494.5 485.2 501.2 16.0
Neighborhood Development Neighborhood Development 113.5 SiO 111.0 113.0 2.0
Rental Housing Resource Center 16.5 15.5 15.8 15.8 -
Total 130.0 130.5 126.8 128.8 2.0
Public Health Public Health Commission 741.0 TEM TS TAstette) 773.0 5 We
Total 741.0 731.7 755.9 773.0 Aza
Non-Mayoral ity Clerk 14. (Bo es} nD! 15.0 -
City Council 67.0 66.5 70.2 70.2 -
Finance Commission 4.0 4.0 4.0 4.0 -
Licensing Board 10.0 11.0 11.0 11.0 -
Registry of Deeds 56.0 - - - -
Sheriffs Department - - - - -
Total 151.0 97.0 100.2 100.2 -
“Grand Total. StC~C—tCsC ne OA die ad 2, 166mm] fb04.0 came 2) D020 eee

2 4 Summary Budget

EXTERNAL FUNDS

Supplementing the services that are provided by
the City’s $1.8 billion general fund budget is
approximately $359.5 million in external funds.
These funds consist mostly of federal, state and
private funding earmarked for specific purposes.
Education, housing, economic development,
health, and county corrections are some of the
largest areas for which these funds are targeted.

Twenty departments receive federal, state or other
forms of external funding. Since there are
hundreds of grants and many of them are small,
the focus here is on the largest grants.
Approximately 95% of the City’s external funds are

plan for those four years so that longer term
budget planning can take place in a timely
manner. Note: FY00 external fund expenditures
for the School Department differ from those shown
in Volume II due to timing differences between the
City’s Auditing Department and the School
Department as to what period grant expenditures
are reported. Volume | expenditures are those as

reported by the Auditing Department.

Federal and State Grants

Some of the larger federal grants received by the
City have been a vital source of funding for many
years, For example, in FY02, the School

External Funds

FYO0O
Expenditure

Boston Public Schools
Neighborhood Development

Suffolk County Sheriff
Public Health Commission
Library Department

Police Department

Other

303,537,964

found in six of the twenty departments. These six
departments are the School Department,
Neighborhood Development, Sheriff's Department,
Public Health Commission, Library Department,
and Police Department. Other departments that
also have significant grant funding are the Elderly
Commission and the Transportation Department.
Descriptions and amounts for grants by
department can be found in Volumes II and II].

State funding provided for the Central Artery /
Third Harbor Tunnel (CA/T) related City services
is not mentioned below because this significant
amount of funding is diffused among several City
departments. As the purpose of the CA/T funding
is project-specific, the duration of this funding will
not go beyond the project itself. Departments
providing the most significant CA/T-related
services are Transportation, Fire, Police and the
Public Health Commission. The City has a current
agreement with the State’s Central Artery/Tunnel
Project on a four year budget extension that runs
through June 30, 20038. The City’s funding for that
four-year period reflects a significant reduction as
the project heads toward completion with limited
resources. Each of the City departments involved
in the project have been given a funding allocation

Summary Budget

93,287,940
58,469,124
82,405,299
28,054,857

9,070,510

159205100
24,323,484

FY01 FY02
Estimated Estimated

114,025,303
70,682,552
90,277,402
29,245,938

9511735782
8,948,689
23,419,343

113,504,517
73,200,243
96,082,882
42,571,791

9,703,287
6,473,930
Wi 19 77205

345,773,009 359,456,355

Department is expected to receive $26 million in
Title I entitlement, a grant that the City has been
receiving for a number of years. This funding has
supplemented education programs in schools with
significant populations of low-income students.
The City has also received for many years
Community Development Block Grant (CDBG)
funding for a variety of neighborhood development
activities. Other sources of federal funding
received by the City address diverse needs and/or
creative approaches such as community policing,
housing support for the homeless, and investment
in the City’s empowerment zone.

State grant funding for the City has grown most
significantly over the last few years in the area of
corrections. In FY94, the state funded
approximately 74% of the Suffolk County Sheriffs
Budget. By FY99 the amount was 93.125% of a
growing budget. Over the long-term, state support
for the City’s Library system has also grown. The
state’s largest contribution for local services is in
the area of K-12 education. However, most of this
funding is direct to the City’s general fund, in
which the major requirement for receipt of the
funds relates to a minimum general fund school
budget. For FY02, the state is projected to

distribute $204.6 million to Boston directly to the
City’s general fund in Chapter 70 educational
reform aid.

A description of the largest federal and state
supported programs in the six departments
managing the bulk of the City’s external fund
resources is given below.

Neighborhood Development

The Community Development Block Grant
(CDBG) is a sizeable annual grant from the U.S.
Department of Housing and Urban Development
(HUD) to the City of Boston designed to fund a
variety of neighborhood development activities.
The City expended approximately $26.9 million in
CDBG funding in FY00, and estimates spending
$36.2 million in FY01 and $35 million in FY02. At
least 70% of CDBG funds must be used to benefit
low and moderate-income households. CDBG
funds are used to produce and preserve affordable
housing, revitalize neighborhood commercial
districts, assist the renovation of non-profit
facilities, improve vacant lots, promote and
monitor fair housing activities, and assist non-
profit organizations in the operation of emergency
shelters, health care, youth and adult literacy
programs. CDBG funds cannot be used for general
government services and cannot replace funding
cuts from existing public service activities. CDBG
funding is also being utilized as a security for
Section 108 loans. ;

Emergency Shelter Grant/Shelter Plus
Care/Supportive Housing - These three federally
funded grants are administered by HUD. FY01
funding will be $13.3 million while another $11.7
million is expected for FY02. Funding decisions on
these three competitive grant applications will be
announced in the fall. The Emergency Shelter
Grant supports the development and operations of
emergency shelters for the homeless. The Shelter
Plus Care grant program provides rental
assistance for homeless people with disabilities,
primarily those with serious mental illness,
chronic problems with alcohol and/or drugs, and
AIDS. Other federal, state or local sources provide
the support services that must match the value of
the rental assistance. The Supportive Housing
Program provides service, operating and/or capital
funds for a broad range of housing and social
service projects. The program requires that

applicants match the amount of supportive
housing acquisition and development funds
requested with an equal amount of funding from
other sources.

HOME Investment Partnership - The HOME
Partnership Program is a grant from HUD to
support the development of affordable housing.
The City expended $5.7 million in this program in
FY00 and estimates spending $7.69 million in
FY01. Projected spending for FY02 is $7.98 million.
Eligible activities include new construction or
rehabilitation of housing, tenant-based rental
assistance for up to two years, and assistance to
first-time home buyers. All HOME funds must be
used to benefit low and moderate-income
households. Fifteen percent of HOME funds are
set aside for projects sponsored by Community
Housing Development Organizations and five
percent is set aside for operating costs for
Community Housing Development Organizations.

Section 108 Loan Project/Economic Development
Initiative - Section 108 funds are available to
eligible cities from HUD on an application basis.
The City, through a pledge of its current and
future CDBG grant awards, secures Section 108
funds. These funds can only be used for economic
development projects. The Economic Development
Initiative Program is a special HUD program that
makes available grants to cities to spur economic
opportunity. This initiative also promotes
community development through a long-term
strategy: a) establishing community-based
partnerships; b) training residents for new job
opportunities; c) developing a plan for responding
to community needs by integrating economic,
physical human, and other strategies. The City
received two multi year grants of $22 million each
for these two programs for use within the
Empowerment Zone. (Another $3 million was
reserved for social service activities in the
Empowerment Zone). The funds are used to assist
new or existing smaller scale neighborhood
commercial enterprises and larger scale
commercial and/or industrial development
projects. These funds must be used to lower the
cost or lower the risk to the City on Section 108
loans made to eligible economic development
projects. Spend down of these funds has been
spread over the past several years.

Summary Budget

School Department
The School Department’s FY02 General Fund

Budget of $635.1 million is supplemented with
approximately $113.5 million in external funds.
There are four main categories of funding: formula
grants, competitive grants, reimbursements and
other (private resources for the most part). Title |
Entitlement and the School Lunch
Reimbursement program are the two largest.
external funding items and make up the bulk of
federal support.

Community Partnerships for Children - The
Community Partnerships Program funding is the
largest competitive grant received by the School
Department. This is a State program to create an
early education system in the City of Boston with
Head Start Centers, Private Day Care Centers, and
Family Based Day Care. The amount budgeted by
the School Department for this program is $15.1
million and $15.1 million in FY01 and FY02,
respectively.

Class Size Reduction - The School Department
expects to receive $4.77 million in FY02 from a
federal grant program to increase staff in the
classrooms — an increase of about $910,000 from
the grant received in FY01. In FY02, the City will
also receive a Class size reduction grant from the
state in the amount of $4.1 million.

Title I Entitlement - This federal program
supplements education in schools with significant
populations of low-income students. This key
source of funding for the Boston Public Schools
makes up a large portion of the federal forrnula
grant funding received. The School Department
estimates spending levels for this program in FY01
and FY02 of $24 million and $26 million,
respectively.

School Lunch - The School Lunch program,
administered by the Department of Agriculture,
reimburses local school districts on a per meal
basis for the costs of breakfasts and lunches for
low-income students. The School Department has
budgeted this federally funded reimbursement
program at $20.45 million for both FY01 and FY02.

SPED 94-142 Entitlement - This is a federal
formula grant in support of special education
programs. The amount budgeted by the School
Department in this program area for FY01 and
FY02 is $8.25 million and $9.78 million,
respectively.

Summary Budget

Public Health Commission

Boston Healthy Start - The purpose of this project
is to develop a comprehensive needs assessment
and carry out a service plan to address those
factors most affecting infant mortality in the City
of Boston. Three project areas consist of those
census tracts found to have both the highest
numbers of infant deaths and the highest infant
mortality rates in the City. Overall, the City has
experienced significant improvement in this
health area. Public Health Commission projects to
receive $1.97 million for this program in FY02.

Ryan White Care Act - This funding supports
delivery or enhancement of HIV-related outpatient
and ambulatory health and support services and
inpatient case management services that prevent
unnecessary hospitalization or that expedite
discharge, when medically appropriate, from
inpatient facilities. The estimated level of
spending for this federally funded program is $15
million for FY02.

Shelter: Long Island and Long Island Annex - This
project provides homeless services in the form of
shelter, food, clothing, health care, and social
services for up to 360 homeless adult men and
women. Of the 360 beds, 50 beds are reserved for
women, 310 beds are reserved for men and one
room for families in crisis. Guests arrive at the
shelter via shuttle bus from the Boston Medical
Center campus. In addition, the Public Health
Commission receives state funding for the annex
at Long Island Shelter. This funding provides
homeless services for 100 homeless clients nightly,
including food, shelter, case management, and
health care. Overall, projected external funding
for homeless services in the Public Health
Commission Budget for FY02 totals $9.7 million.

Police Department
The Police Department’s grant funding on both the

federal and state level has focused most upon
adding police officers and community policing.

Same Cop, Same Neighborhood - This
neighborhood policing program is based on the
belief that police officers and private citizens
working together can help address community
problems related to crime. The program is
supported with a grant awarded by the
Massachusetts Executive Office of Public Safety.
The total cost of the program supported by this
grant was $2.5 million in FY00 while estimated

241

expenditures for FY01 are $2.4 million. For FY02
the Department has estimated funding of $2
million for this program.

BJA Block Grants - This federal program is
awarded by the Bureau of Justice for the purpose
of reducing crime and improving public safety
through the purchase of police equipment, the use
of police overtime, and to support community
partnerships for community policing. The
spending for this program was $2.2 million in
FY00, and is estimated to be $1.97 million in FY01
and $3 million in FY02.

Judicial Oversight Demonstration Initiative -
These funds, made available through the Violence
Against Women Act and awarded by the U.S.
Department of Justice, are being used to increase
offender accountability and improve victim safety
through the development and implementation of
the Dorchester Domestic Violence Court. Spending
from this grant is expected to be about $1 million
in FYO1 and $431,000 in FY02.

Overall, the level of support from the federal
government for local crime control has increased
significantly during the past few years. Total
projected spending for all grants in FY02 is
conservatively estimated at $6.5 million (includes
only grants that are definite) and is likely to
exceed this amount. The nature of the grant
programs has tended to be short-term funding that
runs its course and serves its purpose amd is then
supplanted by new programs.

Sheriff's Department

State funding for the Sheriff's Department is
mainly composed of direct funding for the
operation of the department from the state’s
general fund. A relatively small additional piece of
funding comes from Suffolk County’s portion of the
state deeds excise tax.

Over time, the state has shifted the various costs
of running counties from the municipalities to the
state. This began in the 1970s when the cost of
courthouse employees was shifted to the state. In
1985, the only courthouse employees not included
in the earlier shift, the maintenance workers,
became state employees. Due to the burden of an
increasing jail population statewide, during the
1980's the state committed to building new jails
and renovating current jails in order to expand the

number of cells statewide. Thus, the Suffolk
County’s two old and relatively dilapidated jails
were replaced with new and larger facilities. The
construction costs were fully paid for by the state.
The state also committed to cover, at a minimum,
the growing costs of corrections for municipalities
beyond the 2.5% growth that could be managed
with allowable property tax growth. Over time, this
meant the state was covering a larger and larger
portion of the county corrections cost. For Suffolk
County, this has culminated with the state
covering over ninety percent of the Sheriff's
Department’s expenses since FY97.

Direct state funding for the two jails operated by
the Sheriff's Department has increased from $40.6
million in FY94 to $54.1 in FY96 to $84.7 million in
FY01. Direct state funding for FY02 is estimated at
$87.6M. This funding is further supplemented by
$5 million in FYO1 and $6 million projected in
FY02 in deeds excise revenue.

Library Department
Total funding for the following three state grant

programs is estimated at $8.3 million for FY01 and
$8.6 million FY02.

Library of Last Recourse - The Library of Last
Recourse provides reference and research services
for individual residents of the Commonwealth at
the Boston Public Library through developing,
maintaining, and preserving comprehensive
collections of a research and archival nature to
supplement library resources available throughout
Massachusetts. The Library maintains the
personal resources, expertise, and bibliographic
skills needed to develop and provide access to
reference and research collections.

Boston Regional Library - The Boston Regional
Library System Program (BRLS), which has
replaced the Eastern Regional Library System, is a
cooperative organization of 105 public, academic,
school and special (government, medical, non-
profit, and corporate) libraries in the cities of
Boston, Malden and Chelsea. Headquartered at
the Boston Public Library, BRLS supports
enhanced reference and information services,
interlibrary loan and journal document delivery,
continuing education and staff development,
consulting on library operations and a variety of
cooperative programs. The BRLS operates under a

Se uamMeMrda th Veu Bsuedegrert

cost reimbursement agreement granted by the
Commonwealth of Massachusetts Board of Library
Commissioners.

State Aid to Libraries - This funding is provided by
the Commonwealth of Massachusetts Board of
Library Commissioners to the Trustees of the
Public Library of the City of Boston annually. The
Library is required to meet certain minimum
standards of free public library service established
by the Board to be eligible to receive the grant.

FY02 - FY03 BUDGET PLAN

Introduction

In the FY97 Budget, a two-year financial projection
was presented for the first time. While statutorily
the City must maintain an annual budget process
subject to the appropriating authority of the City
Council, the second year projection provides a
useful context for these decisions.

In projecting the City’s operating budget for FY03,
the issue of state aid stands out as the most
critical. FY00 is the last year of the statutorily
established funding schedule for education
reform. There has yet to be established a post-
FY00 funding schedule. This leaves the City
without a clear picture of the size of its Chapter 70
Education aid for FY08.

The budget for FY02 has been based on the most
current available revenue picture. The FY03 plan
reflects the best estimate of revenues as well as
projecting the major components of expenditures
given current policy and cost trends.

Revenue Trends
The following pie chart displays the breakdown of
revenue projected for FY03. (Figure 7.)

Major revenue trends for FY03 include:

Property Tax Levy: The 2.5% increase and a
projected $30.0 million of new growth will result in
$54.3 million or 5.6% in additional tax levy.

Excises: Excises are expected to increase $1.9
million or 2.3%, reflecting a slower motor vehicle
excise receipts due to expected slower motor
vehicle sales than in recent years.

Fines: Parking fine revenue is expected to
increase $1.3 million or 2.3%. Additionally, an
increase in code enforcement fines of $150,000 in

Summary Budget

FY02 is expected to continue as a result of
increased collection efforts.

Interest on Investments: Interest income is
expected to increase $1.5 million or 7.5% after
short-term interest rates recover from projected
reductions in FY02.

Payments in Lieu of Taxes: With no new
agreements expected, PILOT revenue should
increase $700,000 or 3.3%. This increase
essentially captures the inflation in the current
agreements.

Chapter 121A: Increases in payments are expected
to total $1.0 million or 2.5%.

Miscellaneous Department Revenue: Projected
from historical trends and conservative economic
assumptions, miscellaneous department income
should increase $1.5 million, or 4.1%.

Licenses and Permits: Constrained by a moderate
increase of $0.6 million in building permits, we
expect a $900,000 or 3.6% increase in FY03.

Penalties & Interest: Projected to be up slightly in
FY08.

Available Funds: A small increase from FY02 of
$100,000 is expected in FY03.

TEACHERS
PENSIONS
2.3%

STATEAID
27.7%

FINES
3.3%

ocr OTHER
PROPERTY REVENUE
TAXLEVY 82%
cis EXCISES

4.6%

FY03 Estimated Recurring
Revenue

Figure 7

State Aid: Projected to increase $12.9 million or
2.6% due to large increases in charter school
tuition offset by only modest expected increases in
Chapter 70 education aid and charter school
reimbursements. Additionally, an educational
reimbursement of approximately $7.0 million by
the state, in accordance with the terms of the

Quinn Bill is included. Note, the City’s lottery
distribution in FY08 will again reflect only profit
growth in the lottery.

Teachers’ Pension Reimbursement: A small
increase in FY03 is based on the reimbursement.
arrangement with the state and is reasonably
predictable.

Non-Recurring Revenues: For FY08, as in FY02,
$1.9 million will be applied to the risk retention
reserve plus $876,000 to fund the costs associated
with the after school initiative, through a transfer
from the surplus property fund.

Total recurring revenues in FY03 are projected to
increase by $75.8 million, or 4.38% over FY02
Budget projections. This increase is based on
conservative revenue estimates and an assumption
that the economy will continue its current level of
growth for the 24 months from today to the end of
FY03.

Expenditure Trends
The following pie chart displays the allocation of
expenditures projected for FY03. (Figure 8.)

Major expenditure trends for FY03 include:

City Departments: With no long-term recurring
program increases on the horizon, the major
impacts on City department appropriations will be
collective bargaining and inflation. Based on
current revenue projections for FY03 and the
uncertainty of the level of Chapter 70 Education
Aid, along with the increases projected for FY03
fixed costs, City Departments in total will be
limited to a 4% increase over FY02 appropriations.
Many of the city’s collective bargaining agreements
are due to expire on June 30, 2002; any cost of
living increases included in future collective
bargaining agreements will have to be negotiated
within the 4%. The outcome of current
negotiations with the Firefighters Union and the
impact of the educational incentive provision (the
Quinn Bill) in Police Department contracts will
play a significant part in the actual outcome for
FY03. Inflationary cost increases continue to be
particularly significant for large contractual
service items in basic city services such as trash
removal and alterations and repair contracts, for
utilities costs, and employee health benefits.

3 0

OTHER

\| 42.0%

SCHOOL
DEPT
35.9%
PENSIONS
DEBTSERV Seaee ec
7.2%
STATE
ASSESS

FY03 Estimated Expenditures
as a Percentage of Recurring
Revenue
Figure 8

Public Health Commission: Projecting public
health services and EMS at current levels, the
City’s net subsidy to the PHC is projected to
increase 3% over the FY02 Budget. Due to the non-
operational costs included in PHC’s budget such as
health benefits and pension costs the city will
need to evaluate the feasibility of that 3% during
the FY03 Budget formulation process.

County Departments: Again, the City’s position
regarding the proposed state takeover of county
functions argues for equalizing the local effort to
5%. Pending resolution of this issue at the state
level, the FY03 projection conservatively assumes
a 3% increase in this appropriation, but this is one
item that is out of the control of City management.

School Department: As in previous years, programs
with multi-year planning horizons are included in
the FY02 Budget and will have an impact on
planning for FY03. The current Boston Teachers
Union contract runs through August 31, 2003. Both
of these items will contribute to the projected
increase of 4% in FY03. Funding of ongoing
initiatives such as the Comprehensive Literacy and
Math Initiative, reductions in student-teacher
ratios, support for the Technology Initiative and
bus purchases are factored in, as are inflationary
impacts.

The total appropriations under these parameters
would increase by $57.37 million in FY03 over the
budget for FY02.

Fixed Costs: Given that the pension-funding
schedule for the current city payroll, the debt

Summary Budget

CITYDEPTS

service policies followed in the City’s capital plan,
and mandated state assessments are known, fixed
costs can be predicted fairly accurately. In FY03,
fixed costs will increase by $17.88 million or 5.6%,
led by an $11.25 million or 9.2% increase in debt
service due to borrowings to fund school
construction and other capital projects and a $4.82
million or 3.7% increase in pensions costs.

Bottom line: Under these scenarios, the City’s
Operating Budget would remain balanced.

Planning a Balanced Budget

Preparing a two-year planning horizon is useful
because it provides time to make adjustments to
relieve the cost pressures on certain services. It
also promotes cost-saving or new programming
alternatives to improve the financial position
projected in the second year, and helps us to
monitor changes in assumptions as new needs or
innovations present themselves.

Much of the City’s budget remains fairly stable
year-to-year, but variances as little as 1% could
add up to an $18 million problem in the bottom
line. Common areas of variance are snow removal,
with year-to-year swings of millions of dollars;
legal settlements, which the City attempts to
reserve for but may need to absorb on a pay-as-
you-go basis; public safety overtime, particularly if
a significant event occurs (when the Red Sox win
the championship, for example), or when
dignitaries visit the City, or an outside source of
funding is suddenly eliminated for an essential
need.

The City’s fiscal controls are effective in reducing
the chance for an unmanageable deficit. Managing
position vacancies through the Office of Budget
Management and the COO Office ensures that
justifications to add personnel fit within the City’s
fiscal parameters. The implementation of the
City’s financial and human resources information
system (BAIS) has raised the level of systematic
controls that can be used to project and plan for
personnel funding requirements.

Conclusion

This two-year overview is provided as a guide to
understand the impacts of the decisions presented
in the budget, and to provide a framework for
future initiatives and financing proposals.

Summary Budget

Although it is not statutorily required, it is a useful
tool in long-range planning and policy analysis.

From a budget planning and management
standpoint, the parameters summarized here are
being built upon through an interactive forecast
model with key departments, to allow the
development of multi-year scenarios for individual
departments’ operations, set within the financial
constraints affecting the City’s overall budget.

3 1

CITY OF BOSTON
BUDGET SUMMARY

(Dollars in Millions)

REVENUES
Property Tax Levy
Overlay Reserve
Excises
Fines
Interest on Investments
Payments In Lieu of Taxes
Urban Redevelopment Chapter 121A
Misc. Department Revenue
Licenses and Permits
Penalties & Interest
Available Funds
State Aid
Teachers Pension Reimbursement

Total Recurring Revenue
Non-Recurring Revenue

Total Revenues

EXPENDITURES
City Departments
Public Health Commission
County
School Department
Reserve for Collective Bargaining

Total Appropriations
Pensions

Debt Service

State Assessments
Reserve

Total Fixed Costs

Total Expenditures

Surplus (Deficit)

FYO2 FYO3
Budget Projected
970.89 1,025397
(46.23) (48.82)

3 Wns te) 84.24
59.27 60.64
19.45 20.90
Z1to2 22.55
38.84 39.81
36.86 38.31
25.06 25.96

1 Oar 14.210

ab ras! 11:8F7
497.38 510.30
41.40 42.80
1,769.58 1,844.83
1.88 1.88

1e 771246 1,846.70
[ievs P46 T7Tfi48
627505 64.43

4.84 4.99

636.56 662.02

15.02 0.00
17454807 1,508.54
130.94 135.76
121.84 133.08
67.51 68.75

0.00 0.56
320.29 338.16

1°77 1246 1,846.70
0.00 0.00

Numbers may not add due to rounding

Summary Budget

BO :
CONDITA AD. S/fh
en 1630. a

City Council Orders Filed by the Mayor

Operating Budget Orders:

e Appropriation and Tax Order for the Fiscal Year 2002

e Appropriation Order for the Boston Public Schools for Fiscal Year 2002

e Appropriation Order for the Law Department for Fiscal Year 2002

e Appropriation Order for the City Council for Fiscal Year 2002

Capital Plan Orders:

e Eleven loan orders authorized under the provisions of Chapter 44 of the General Laws

Public Building Construction

Remodeling and Extraordinary Repairs to Public Buildings - Various departments
Remodeling and Extraordinary Repairs to Public Buildings — Fire department
(currently pending final approval)

Bridge Construction / Reconstruction

Public Ways Construction / Extension / Widening

Departmental Equipment

Fire Boat Acquisition

Fire Alarm / Radio System Communication Installation

Fire Alarm / Radio System Communication Installation (currently pending final
approval)

Outdoor Recreational and Athletic Facilities

Computer Hardware and Software

e One loan order: General Capital Improvements - authorized under the provisions of
Chapter 642 of the Acts of 1966, as amended

e One loan order: School Projects - authorized under the provisions of Chapter 70B, as
amended, and/or Chapter 642 of the Acts of 1966, as amended and/or Chapter 44,
Section 7, Clauses (3) and (3A) for improvements, construction and repairs for various
School Projects.

City Council Orders

CITY CF BOSTON.
IN CITY COUNCIL

Appropriation and Tax Order for the fiscal year
Commencing July 1, 2001 and ending June 30, 2002

ORDERED:
I. That to meet the current expenses of the City of Boston and the County of Suffolk, im the fiscal year commerci=

July 1, 2001 and ending June 30, 2002, the respective sums of money specified in the schedules hereinafter set c:—
be, and the same hereby are, appropriated for expenditure under the direction of the respective boards and offices
severally specified, for the several specific purposes heremafter designated and, except for transfers lawfully m2c=.
for such purposes only said appropriations, to the extent they are for the maimtenance and operation of parkinc
meters, and the regulation of parking and other activities incident thereto (which is hereby determmed to be
$10,000,000), being made out of the income from parking meters and, to the extent they are for other purposes,
being made out of the proceeds from the sale of tax title possessions and receipts from tax title redemptions in
addition to the total real and personal property taxes of prior years collected from July 1, 2000 up to and inciudine
March 31, 2001, as certified by the City Auditor under Section 23 of Chapter 59 of the General Laws and the
proceeds from the sale of surplus property to be transferred m an amount not to exceed $1,876,000 pursuant to t=
provisions of Section 24 of Chapter 190 of the Acts of 1982 as amended by Section 4 of Chapter 701 of the Acts of
1986, and out of available funds on hand July 1, 2001, as certified by the Director of Accounts under said Sectio-=
23, and the balance of said appropriations to be raised by taxation pursuant to said Section 23:

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CITY OF BOSTON
IN CITY COUNCIL

FURTHER ORDERED:
Ul. That to meet so much of the expenses of maintaining, improving and embellishing in the fiscal period commencizs

July 1, 2001 and ending June 30,'2002, cemeteries owned by the City of Boston, or in its charge, as is not met by the
income of deposits for perpetual care on hand December 31, 2000, the respective sum of money svecified in the
subjoined schedule be, and the same hereby is, appropriated out of the fimd set up under Chapter 13 of the Acts of 195]
the same to be expended under the direction of the Commissioner of Parks and Recreation:

400100

Cemetery Division tae
Parks and Recreation Departent
$1,778,400

a dn City Conseil ad 2601
£6 f ;

CITY OF BOSTON « MASSACHUSETTS

OFFICE OF THE MAYOR .
THOMAS M. MENINO ‘

June 26, 2001

TO THE CITY COUNCIL
Dear Councilors:

I retransmit herewith an appropriation order for the Boston Public Schools for FY02 in the amount of
$636,563,231 submitted pursuant to the provisions of Chapter 224 of the Acts of 1936, as amended by
Chapter 190 of the Acts of 1982, as further amended by Chapter 701 of the Acts of 1986, Chapter 613 of
the Acts of 1987, and Chapter 108 of the Acts of 1991. This order contains an increase of $1.44M over the
budget as originally submitted in April. The increase will fund the FY02 cost of the Administrative Guild’s
collective bargaining contract that was settled after the April submission.

This budget, which is $24.9 million larger than FY01, continues my commitment to improving education.
Because no other investment promises a greater return than that which we invest in children, similar to
years past, the schools receive the lion’s share of new revenues. The FY02 operating budget continues
funding for the City’s five-year plan of reform, “Focus on Children” aimed at improving school
performance, and accomplishes a number of critical goals. The FY02 operating budget enables us to hire
new teachers, reduce class sizes at all levels, and purchase new textbooks for art instruction and
mathematics.

New dollars authorized in the FY02 operating budget will also enable the Schools to expand the Transition
Program and Mathematics Support Plan. The expansion in FY02 will include after-school instruction to
students who need it most, using the City’s very best math teachers. These two critical initiatives will help
the City’s lowest-performing students meet the rigorous standards and high expectations that are the
foundation of the School Committee’s promotion policy, the implementation of Focus on Children, and the
Commonwealth’s graduation requirements.

BOSTON CITY HALL ¢ ONE CITY HALL PLAZA * BOSTON ¢ MASSACHUSETTS 02201 © 617/635-4000

ow
G2 Printed on recycled paper

Over the past two months concern has been raised over funding for instructional materials. Recognizing
that there are resources available to the School Department and in other City departments that can be
utilized to address this issue, | have approved the following four-point plan:

e The School Department will earmark a portion of unanticipated educational grants from the State
for replacement of instructional materials. Based on the current status of the State budget process
it is now reasonable to assume that the School Department will receive this additional funding.

e The School Department will implement a new textbook inventory control system.

e The City will engage an outside auditor to conduct a management audit of textbook procurement
and supply management practices currently being followed by the School Department.

e The Boston Public Library will work with the School Department to purchase textbooks out of its
FY02 book budget for branch libraries throughout the City. The Library will also work with the
School Department to explore the use of its e-book system as an alternative way to increase access
to textbooks.

My commitment to schools is also illustrated through the City’s Five Year Capital Plan. The City of
Boston FY02-FY06 Capital Plan includes authorization to begin design and acquisition for a major
renovation and addition at the Burke High School. | continue to direct resources toward the improvement
and maintenance of schools, including investment in school technology.

The Boston School Committee and the Superintendent have submitted a budget that balances competing
priorities within available resources. This budget provides our students with the tools necessary to meet the
standards that have been established by the Boston School Committee. | respectfully request your support
of the FY02 appropriation for the Boston Public Schools.

Sincerely,

—_— a
wee Dy

“= ee

a Thomas M. Menino

Mayor of Boston

CITY OF BOSTON
IN CITY COUNCIL

ORDERED: That pursuant to Chapter 224 of the Acts of 1936, as amended by Chapter 190 of the Acts of
1982, and as further amended by Chapter 701 of the Acts of 1986, Chapter 613 of the Acts of 1987, and
Chapter 108 of the Acts of 1991, to meet the current operating expenses of the School Department in the
fiscal period commencing July 1, 2001 and ending June 30, 2002, the sum of SLX HUNDRED THIRTY
SIX MILLION, FIVE HUNDRED SIXTY THREE THOUSAND TWO HUNDRED AND THIRTY ONE
DOLLARS ($636,563,231) be, and the same hereby is, appropriated, said sum to be raised by taxation
pursuant to Section 23 of Chapter 59 of the General Laws:

Boston School Department $636,563,231

| HEREBY CERTIFY THAT
THE FOREGOING, IF PASSED IN
THE ABOVE FORM, WILL BE IN
y a WITH LAW.
MERITA A. HOPKINS
CORPORATION COUNSEL Gf

CITY OF BOSTON = 285%.
IN CITY COUNCIL Me

ORDERED:

That in addition to the appropriations for the City of Boston and the County of Suffolk heretofore made for
fiscal year 2002, to meet the current operating expenses of the Law Department in said fiscal year, the
following sums be, and same hereby are appropriated, said sums to be raised by taxation pursuant to Section
23 of Chapter 59 of the General Laws:-

100-151000 Law Department
Personnel Services $2,953,689
Contractual Services $1,970,049
Supplies & Materials $ 63,421
Current Charges & Obligations .$ 27,099
Equipment $ 116,600

IN CITY COUNCIL JULY 13, 2001. PASSED, YEAS EIGHT, NAYS FOUR.
APPROVED BY THE MAYOR JULY 13, 2001.

ATTEST: | : A 7

ROSARTA SALERNO
CITY CLERK

CITY OF BOSTON ob, oF Baste
IN CITY COUNCIL ;

ORDERED:

That in addition to the appropriations heretofore made for fiscal year 2002, to meet the current operating
expenses of the City Council in said fiscal year, the following sum be, and same hereby is appropriated, said
sum to be raised by taxation pursuant to Section 23 of Chapter 59 of the General Laws:-

2002-100-112100-51000 City Council $60,000

IN CITY COUNCIL JULY 13, 2001. PASSED, YEAS EIGHT, NAYS ONE.
APPROVED BY THE MAYOR JULY 13, 2001.

ATTEST: Z ,

ROSARIA SALERNO
CITY CLERK

CITY OF BOSTON Docket: 0758

SubClass: 10417
DING Ye ULI Cs bi Program: 1006

ORDERED: That the sum of Five Hundred Ninety Five Thousand Dollars ($595,000) be, and
hereby is, appropriated for acquiring land, or interests in land, for any purpose for which the
City is, or may hereafter be, authorized to acquire land or interests therein; and for the
construction of buildings, or for additions to such buildings where such additions increase the
floor space of said buildings, including the cost of original equipment and furnishings of said
buildings, for the purposes of the Fire and School Departments; and that to meet said
appropriation the Collector/Treasurer be, and hereby is, authorized under the provisions of
Clause (3) of Section 7 of Chapter 44 of the General Laws, to issue from time to time, with the
approval of the Mayor, bonds, notes or certificates of indebtedness of the City up to said
amount, provided that the appropriation authorized through this order be expended only on
those projects as described by name attached herein. Be it further ordered:

ORDERED: That the Office of Budget Management and the managing department for each
project shall issue written quarterly capital reports to the Boston City Council on all capital

construction projects funded by.this loan order, beginning on October 1, 2001 and subsequently
on January 1, April 1 and July lof each project. These shall include the following
‘information:

Written description of rrikets summarizing activities for the last quarter including but
not limited to: existing, current and future authorization detail, scope of project, current status
of project, projected start date, projected milestones/benchmarks tied to construction schedule,
projected completion date, projected on-line date, historical spending information, current year
to date spending information up-fo: ‘Test dafé of reporting quarter, anticipated future spending,
any information on anticipated “Gostiover-runs.

In City Council June 29, 2001. Read once and passed, yeas 13.
In City Council August 8, 2001. Read a second time and again passed, yeas 13.

Approved by the Mayor August i7, 2001, he certifying on the original order

that the foregoing loan order is not n his opinio to meet a current expense
Attest: ; 5 Jo

Rosaria Salerno
City Clerk

September 7, 2001

I hereby certify that no petition, asking that the question or approving or
disapproving the foregoing order be submitted to the voters, was filed with
the City Clerk within twenty days from August 17, 2001, and the order therefore
becomes effective on September 7, 2001 in accordance with the provisions of

Chapter 108 of the Acts of 1039.
Attest: ; pe 4,

Rosaria Salerno
City Clerk

Attachment

1 - Fire Headquarters
2 Curtis Guild School

CITY OF BOSTON

IN CITY COUNCIL |
Docket: 0755
SubClass: 10418
Program: 1007

ORDERED: That the sum of Fifty Nine Million Three Hundred Twenty Thousand Dollars
($59,320,000) be, and hereby is, appropriated for constructing and originally equipping
structures and facilities and for remodeling, reconstructing, making extraordinary repairs
and/or major alterations and additions to existing facilities including original equipment and
landscaping, including the planting of shade trees, paving and other site improvements
incidental or directly related to such remodeling, reconstruction or repair for the purposes of
various city departments including the Community Centers, Fire, Library, Management
Information Services, Neighborhood Development, Police, Property Management, Public
Health Commission, Public Works and School Departments; and that to meet said
appropriation the Collector/Treasurer be, and hereby is, authorized under the provisions of
Clause (3A) of Section 7 of Chapter 44 of the General Laws or under the provisions of Chapter
642 of the Acts of 1966, as amended, to issue from time to time, with the approval of the
Mayor, bonds, notes or certificates of indebtedness of the City up to said amount,

provided that the appropriation ‘authorized through this order be expended only on those
projects as described by name aftached herein.. Be it further ordered:

ORDERED: That the Office of Budget Management and the managing department for each
project shall issue written quart¢rly capital reports to'the Boston City Council on all capital
construction projects funded bysthis loan order, beginning on October 1, 2001 and subsequently
on January 1, April 1 and July 1 of each project. These shall include the following |
information: fehaty ;

Written description of projééts summarizing ‘activities for the last quarter including but
not limited to: existing, current'atidjfuture authorization detail, scope of project, current status
of project, projected start date, projected milestones/benchmarks tied to construction schedule,
projected completion date, projecté on-line date, historical spending information, current year
to date spending information up toast date of reporting quarter, anticipated future spending, |
any information on anticipated cost over-runs,

In City Council June 29, 2001. Read once and passed, yeas 13.
In City Council August 8, 2001. Read a second time and again passed, yeas 12, nays

Approved by the Mayor August 17, 2001, he certifying on the original order that
the foregoing loan order is not, in hi opinion, to meet a current expense.

Attest:

Rosaria Salerno
City Clerk

September 7, 2001

I hereby certify that no petition, asking that the question of approving or
-disapproving the foregoing order be submitted to the voters, was filed with
_the City Clerk within twenty days from August 17, 2001, and the order therefore
becomes effective on September 7, 2001 in accordance with the provisions of

Chapter 108 of the Acts of 1939. f
Attest: ( . 4, f

Rosaria Salerno
City Clerk

Attachment
1. Hyde Park Municipal Building
2. Mason Pool
. Paris Street Pool
. Roslindale Community Center Roof
Critical Repairs Fund
Engine 37 ~
. Engine 48
. Engine 51
. Engine 56
10. Engine 8
11. Critical Repairs Fund
12. Johnson Building Chiller
13. Johnson Building Fire Alarm Upgrade
14. Roof Repairs at 7 Branches
15. Roslindale Branch Library
16. South Boston Branch Library
17. MIS Computer Room
18. MIS Computer Room Security
19. Upgrade City Hall Riser Cable
20. 26 Court Street Fire Safety
21. Archives and Records Management Center
22. Long Island Switchgear
23% Remove/Replace Underground SNR Tanks
24. Area A-I Station
25. Area B-2 Station Roof
26. Area C- 11 Station
27. Area D-14 Station
28. HVAC Upgrades at Various Locations
29. 152 North Street 7
30. Animal Shelter
31. City Hall Electrical Panels
32. City Hall Fire Safety
33. Municipal Building Security Alarm Update
34. Veronica Smith Center Waterproofing
35. Critical Facility Repairs
36. Long Island Administration Building Roof
37. Long Island Facility Improvements
38. Long Island Window Replacement
39. McGilivary Basement Settlement
40. South Block Buildings I and 4
41. Central Maintenance Facility Floor Repairs
42. Central Maintenance Facility HVAC .
43. Central Maintenance Facility Vehicle Wash Roof 44. Central Maintenance Facility Vehicle Wash
45. Access Improvements at Various Schcols 11
46. Boston Arts Academy - Windows/Masonry
47. Bnghton High School Science Labs
48. Charlestown High School.
9, Humphrey O.R.C.
0. Madison Park High Fire Alarm
1, Masonry Repairs at 20 Schools
2. Mission Hill School Electrical
3. P.A. Shaw School
4. South Boston High School 11
5. Technolo ae FY02
56. Tynan School
57. Umana Bames/English High School
38. Window Balance panei

SO 09 NON) - U2

¥: Docket: 0718
Program: 1009
Sub-Class: 10419

CITY OF BOSTON

IN CITY COUNCIL ae

ORDERED: That the sum of Five Million Five Hundred Fifty Five Thousand Dollars. oer ne)
($5,555,000) be, and hereby is, appropriated for the construction or reconstruction of bridges of. <
stone or concrete or of iron superstructure for the purposes of the Neighborhood Development
and Public Works Departments; and that to meet said appropriation the Collector/Treasurer be,
and hereby is, authorized under the provisions of Clause (4) of Section 7 of Chapter 44 of the
General Laws, to issue from time to time, with the approval of the Mayor, bonds, notes or
certificates of indebtedness of the City up to said amount, provided that the appropriation
authorized through this order be expended only on those projects as described by name

attached herein. Be it further ordered:

ORDERED: That the Office of Budget Management and the managing department for each
Droject shall issue written quarterly capital reports to the Boston City Council on all capital
construction projects funded by this loan order, beginning on October 1, 2001 and subsequently
cn January 1, April 1 and July 1 GH each project. These shall include the following

information: .

Written description of projects summarizing activities for the last quarter including but
not limited to: existing, current and future authorization detail, scope of project, current status
of project, projected start date, projected milestones/benchmarks tied to construction schedule,
projected completion date, projected on-line. date, historical spending information, current year
to date spending information up to last date of reporting quarter, anticipated future spending,
any information on anticipated cost over-runs.

In City Council June 29, 2001. Read once and passed, yeas thirteen.

In City Council July 18, 2001. Read a second time and again passed,
yeas eleven, nays two. :

‘ Approved by the Mayor July 26, 2001, he certifying on the original order
that the foregoing loan order is not, in his opinion, to meet a

current expense.
Attest: . ye

Rosaria Salerno
City Clerk

August 16, 2001

I hereby certify that no petition, asking that the question of approving or
disapproving the foregoing order be submitted to the voters, was filed with
the City Clerk within twenty days from July 26, 2001, and the order therefore
becomes effective on August 16, 2001 in accordance with the provisions of
Chapter 108 of the Acts of 1939.

Attest:
Rosaria Salerno
City Clerk

Attaciiment

NM We

Long Island Bridge Critical Repairs
Long Island Bridge Embankment
Long Island Bridge Rehabilitation
Bridge Engineering Overview FY02
Bridge Repairs FY02

McArdle Bridge -

CITY OF BOSTON es

IN CITY COUNCIL ' SubClass: 10420
Program: 1010

ORDERED: That the sum of Nine Million Eight Hundred Two Thousand Dollars

~ ($9,802,000) be, and hereby is, appropriated for the original construction of public ways or the
extension or widening thereof, including land damages and the cost of pavement and sidewalks
laid at the time of said construction, or for the construction of stone, block, brick, cement
concrete, bituminous concrete, bituminous macadam or other permanent pavement of similar
lasting character for the purposes of the Public Works and Transportation Departments; and
that to meet said appropriation the Collector/Treasurer be, and hereby is, authorized under the
provisions of Clause (5) of Section 7 of Chapter 44 of the General

Laws, to issue from time to time, with the approval of the Mayor, bonds, notes or certificates of
indebtedness of the City upto said amouni, provided that the appropriation authorized’ through
this order be expended only on those projects as described by name attached herein. Be it
further ordered: |

ORDERED: That the Office of Bijdget Management and the managing department for each
project shall issue written quarterly‘capital reports to thé Boston City Council on all capital
construction projects funded by this-loan order, beginning on October 1, 2001 and subsequent!y
on January 1, April 1 and July yt of. each pIciece Theselshall include the following
information:

Written description of projects suramarizing activities for the last quarter including but
not limited to: existing, current and future authorization detail, scope of project, current status
of project, projected start date, projected milestones/benchmarks tied to construction schedule,
projected completion date, projectédgn-ling: date, histdtical spending information, current year
to date spending information up fo ltest date of reporting quarter, anticipated future spending,

any information on anticipated costeyver-runs.
In City Council June 29, 2001. Read once and passed, yeas 13.

In City Council August 8, 2001. Read a second time and again passed, yeas 13.

Approved by the Mayor August 17, 2001, he certifying on the original order
that the foregoing loan order is not, in ae opinion, to meet a current

expense. .
Attest: ( | | ae

' Rosaria Salerno
City Clerk

September 7, 2001

I hereby certify that no petition, asking that the question of approving or
disapproving the foregoing order be submitted to the voters, was filed with
the City Clerk within twenty days from August 1/7, 2001, and the order therefore
becomes effective on September 7, 2001 in accordance with the provisions of

Chapter 108 of the Acts of 1939.
Attest:

- Rosaria Salerno
City Clerk

Attachment

Alexander the Great Square Improvements
Back Streets Program

BHA Roadway Design ;
Cambridge, Washington, Tremont Streets
Center Street ‘
Commonwealth Ave Segment A

Roadway Reconstruction FY2001

Grove Hall Parking Facility

CITY OF BOSTON Docket: 0757

IN CITY COUNCIL SubClass: 10421
Program: 1014

ORDERED: That the sum of Five Million Four Hundred Sixty One Thousand Dollars
($5,461,000) be, and hereby is, appropriated for the cost of departmental equipment for the
purposes of the Fire, Library, Management Information Services, Parks and Recreation, and
School Departments; and that to meet said appropriation the Collector/Treasurer be, and hereby
is, authorized under the provisions of Clause (9) of Section 7 of Chapter 44 of the General
Laws, to issue from time to time, with the epproval of the Mayor, bonds, notes or certificates of
indebtedness of the City up to said amount, provided that the appropriation authorized through
this order be expended only on those projects as described by name attached herein. Be it
further ordered:

ORDERED: That the Office of Budget Management and the managing department for each
project shal] issue written quarterly capital reports to the Boston City Council on all capital
construction projects funded by this loan order, beginning on October 1, 2001 and subsequently
on January 1, April 1 and July | &f each project. These shall include the following

information: .

Written description of projects summarizing abtivities for the last quarter including but
not limited to: existing, current anid future 2uthorizatibn detail, scope of project, current status
of project, projected start date, pedjected mijestones/henchmarks tied to construction schedule,
projected completion date, projected on-liné date, historical spending information, current year
to date spending information up to last date‘of reporting quarter, anticipated future spending,
any information on anticipated Sesfpver-rpas. |

In City Council June 29, 2001. Read once and passed, yeas 13.
In City Council August 8, 2001. Read a second time and again passed, yeas 13.

Approved by the Mayor August 17, 2001, he certifying on the original order that

the foregoing loan order is not, <n his inion, to Dep current expense.

osaria Salerno
City Clerk

Attest:

September 7, 2001

I hereby certify that no petition, asking that the question of approving or
disapproving the foregoing order be submitted to the voters, was filed with
the City Clerk within twenty days from August 17, 2001, and the order therefore
becomes effective on September 7, 2001 in accordance with the provisions of

Chapter 108 of the Acts of 1939.
; Attest: - 4, 4,

Rosaria Salerno
City Clerk

Attachment

l Apparatus Replacement
2 Book Security System
3 Fiber Ring Phase II

4 Park Equipment

Humphrey O.R C Vocation Equipment

CITY OF BOSTON “Docket: 0752

SubClass: 10422
IN CITY COUNCIL Program: 1018

ORDERED: That the sum of Two Million Seven Hundred Twenty Seven Thousand Dollars
($2,727,000) be, and hereby is, appropriated for the acquisition of fire boats for the purposes of
the Fire Department; and that to meet said appropriation the Collector/Treasurer be, and hereby
is, authorized under the provisions of Clause (13) of Section 7 of Chapter 44 of the General
Laws, to issue from time to time, with the approval of the Mayor, bonds, notes or certificates of
indebtedness of the City up to said amount, provided that the appropriation authorized through
this order be expended only on those projects as described by name attached herein.

Be it further ordered:

GRDERED: That the Office of Budget Management and the managing department for each
project shall issue written quarterly capital reports to the Boston City Council on all capital
construction projects funded by this loan order, beginning on October 1, 2001 and subsequently
on January 1, April 1 and July 1 of each project. These shall include the following

information:

Written description of projects Summiarizing activities for the last quarter including but
not limited to: existing, current and future authorization detail, scope of project, current status
of project, projected start date, projected milestones/benchmarks tied to construction schedule,
projected completion date, projected on-line date, historical spending information, current year
to date spending information up te: last date of reporting quarter, anticipated future spending,
any information on anticipated cost over-runs. |

In City Council June 29, 2001. Read once and passed, yeas 13.
In City Council August 8, 2001. Read a second time and again passed, yeas 13.

Approved by the Mayor August 17, 2001, he certifying on the original order
that the foregoing loan order is not, in his opinion, to meet a current

expense.
Attest:

Rosaria Salerno
City Clerk

September 7, 2001

I hereby certify that no petition, asking that the question of approving or
disapproving the foregoing order be submitted to the voters, was filed with
the City Clerk within twenty days from August 17, 2001, and the order therefore
becomes effective on September 7, 2001 in accordance with the provisions of

Chapter 108 of the Acts of 1939.
Attest: bia 3c A, s

Rosaria Salerno
City Clerk

Attachment

l Fire Boat

CITY OF BOSTON Docket: 0751

SubClass: 10423
LIM
IN CITY COUNCIL Program: 1019

ORDERED: That the sum of Two Hundred Fifty Two Thousand Five Hundred Dollars
($252,500) be, and hereby is, appropriated for fire alarm communication installations and for
the purpose of extending and improving such installations; and that to meet said appropriation
the Collector/Treasurer be, and hereby is, authorized under the provisions of Clause (14) of
Section 7 of Chapter 44 of the General Laws, to issue from time to time, with the approval of
the Mayor, bonds, notes or certificates. of indebtedness of the City up to said amount, provided
that the appropriation authorized through this order be expended only on those projects as
described by name attached herein. Be it further ordered:

ORDERED: That the Office of Budget Management and the managing department for each
project shall issue written quarterly capital reports to the Boston City Council on all capital
construction projects funded by this loan order, beginning on October 1, 2001 and subsequently
on January 1, April 1 and July 1 of each project. These shall include the following
information:

Written description of projects summarizing activities for the last quarter including but
not limited to: existing, current and future authorizatio# detail, scope of project, current status
of project, projected start date, projected milestones/benchmarks tied to construction schedule, .
projected completion date, projected on-line date, historical spending information, current year
to date spending information up to last date of reporting quarter, anticipated future spending,
any information on anticipated cost over-runs.

In City Council June 29, 2001. Read once and passed, yeas 13.

In City Council August 8, 2001. Read a second time and again passed, yeas 13.

Approved by the Mayor August.17, 2001, he certifying on the original order
that the foregoing loan order, is not, in his opinion, : to meet a current

expense. |
Attest: ae

Rosaria: Salerno
City Clerk

September 7, 2001

I hereby certify that no petition, asking that the question of approving or
disapproving the foregoing order be submitted to the voters, was filed with
the City Clerk within twenty days from August 17, 2001, and the order therefore
becomes effective on September 7, 2001 in accordance with the provisions of

Chapter 108 of the Acts of 1939.
Attest: Ae ”

Rosaria Salerno
City Clerk

Attachment

] Radio System Phase III

CITY OF BOSTON HEC ES

IN CITY COUNCIL SubClass: 10424
Program: 1029

ORDERED: That the sum of Fifteen Million Two hundred Thirty Five Thousand Dollars
($15,235,000) be, and hereby is, appropriated for the construction of municipal outdoor.
recreational and athletic facilities, including the acquisition and development of land and the
construction and reconstruction of such facilities, for the purposes of the Environment, Parks

_ and Recreation and Schoo! Departments; and that to meet said appropriation the
Collector/Treasurer be, and. hereby is, authorized under the provisions of Clause (25) of Section
7 of Chapter 44 of the General Laws, to issue from time to time, with the approval of the
Mayor, bonds, notes or certificates of indebtedness of the City up to said amount, provided that
the appropriation authorized through this order be expended only on those projects as described
by name attached herein. Be it further ordered: | rae’ |

ORDERED: That the Office of Budget Management and the managing department for each
project shall issue written quarterly capital reports to the Boston City Council on all capital
construction projects funded by this loan order, beginning on October 1, 2001 and subsequently
on January 1, April 1 and July lfof each project. These shall include the following
information:

Written description of projects summarizing activities for the last quarter including but
not limited to: existing, current and future Zuthorizatjon detail, scope of project, current status
of project, projected start date, projected milestones/benchmarks tied to construction schedule,
projected completion date, projected on-line date, hiStorical spending information, current year
to date spending information upt6-last date of reporting quarter, anticipated future spending,
any information on anticipated cas over-fins. |

In City Council June 29, 2001. Read once and passed, yeas 13.

In City Council August 8, 2001. Read a second time and again passed, yeas 13.

Approved by the Mayor August 17, 2001, he certifying on the original order
that the foregoing loan order is nots; in his opinion, to meet a current expens

Attest:

Rosaria Salerno
City Clerk

September 7, 2001

Chapter 108 of the Acts of 1939. ;
Attest: :

-Rosaria Salerno
City Clerk

At.achment

1 Condor Street/Belle Island Fish Company Remediation
2. Boston Common
3. Boston Common Playground
4. Chandler Pond
5. Courageous Sailing Center -
6. Dennis Street Park

7. Franklin Park Golf Course
. Garvey Park

9. General Parks Improvements FYO I - 04
10. George Wright Golf Course

11. Hazardous Remediation

12. Hemenway Ballfield

13. Hiscock Park

14, Historic Cemeteries FY02 - 04
15. Joe Moakley Park Synthetic Turf
16. John Harvard Mall

17. Liberty Tree

18. Miranda Park

19. North End Park/Puopolo Ballfield
O'Day Playground
. Ohrenberger School Field
. Peters Park
. Portsmouth Balifteld
. Portsmouth Playground
. Public Garden, Comm. Ave. Mall
. Ramler Park
. Shipyard Park
. Statler Park
Trotter Playground

Union Park

Walker Playground

[ee]

Nw WW Ww WN
=i OV. th — 49 WW = ©

Www ws WwW NM WN WN WV bP
oo

nN —

. School Yard Improvement Fund

CITY OF BOSTON hope saa

: SubClass: 10425
r a nats - Program: 1032, 1033

ORDERED: That the sum of One Million Ninety Thousand Dollars ($1,090,000) be, and
hereby is, appropriated for the development, design, purchase, installation and operation of
computer hardware, computer software, other data processing equipment and computer assisted
integrated financial management and accounting systems, for the purpose of the Management
Information Services Department; and that to meet said appropriation the Collector/Treasurer
be, and hereby is, authorized under the provisions of Clause (28) and/or (29) of Section 7 of
Chapter 44 of the General Laws, to issue from time to time, with the approval of the Mayor,
bonds, notes or certificates of indebtedness of the City up to said amount, provided that the
appropriation authorized be expended eels on those projects as described by name attached

herein. Be it further ordered:

ORDERED: That the Office of Budget Management and the managing department for each
project shall issue written quarterly capital reports to the Boston City Council on all capital
construction projects funded by fais loan order, beginning on October 1, 2001 and subsequently
on January 1, April 1 and July 16% each project. Thesf shall include the following .
information:

Written description of projects summarizing a¢tivities for the last quarter including but
not limited to: existing, current and future authorization detail, scope of project, current status
of project, projected start date, projected milestones/benchmarks tied to construction schedule,
projected completion date, projected on-line date , historical spending information, current year
to date spending information up to last date of reporting quarter, anticipated future spending,
any information on anticipated cost-Over-runs.

In City Council June 29, 2001. Read once and passed, yeas 13.
In City Council August 8, 2001. Read a second time and again passed, yeas 13.

Approved by the Mayor August 17, 2001, he certifying on the original order
that the foregoing loan order is not, in his opinion, to meet a current

expense.
Attest: :

Rosaria Salerno
City Clerk

September 7, 2001

I hereby certify that no petition, asking that the question of approving or
disapproving the foregoing order be submitted to the voters, was filed with
the City Clerk within twenty days from August 17, 2001, and the order therefore
becomes effective on September 7, 2001 in accordance with the provisions of

Chapter 108 of the Acts of 1939.
Attest: Se ae

Rosaria Salerno
City Clerk

’ Attachment

Sn OP ee DO

IBM Disk Upgrade

Imaging and Work Flow System
Storage Area Network

Tape Backup System

CITY OF BOSTON ~:~ Sane ae
IN CITY COUNCIL Ppt bie tetig CSTA , Program:
: ” SubClass:

ORDER OF COUNCILLOR DA VIS “MULLEN

ORDERED: That the sum of Two Million Four Hundred Sixty Thousand Dollars ($2,460,000)
be, and hereby is, appropriated for the planning, designing, acquiring land for, constructing and
originally equipping structures and facilities and for remodeling, reconstructing, or making
major alterations, additions and major repairs to existing facilities including onginal equipment
and landscaping, including the planting of shade trees, paving and other site improvements
incidental or directly related to such remodeling, reconstruction or repair for the purposes of
various city departments including the Neighborhood Deve lopment, Office of Budget
Management and Parks and Recreation Departments, and

that to meet said appropriation the Collector/Treasurer be, and hereby is, authorized under the
provisions of Chapter 642 of the Acts of 1966, as amended, to issue from time to time, with the
epproval of the Mayor, bonds, notes or certificates of indebtedness of the City up to said
emount, provided that the appropriation authorized through this order be expended only on the
project as described by name attached herein. Be it further ordered:

ORDERED: That the ne of Budget Managentent and the managing department for each
project shall issue written quarterly capital reports to the Boston City Council on all capital
construction projects funded by this loan order, beginning on October 1, 2001 and subsequently
on January 1, April 1 and ay 1 of each peal: These shall include the following
information:

Written description of proj ects summarizing activities for the last quarter including but
not limited to: existing, current and future authorization detail, scope of project, current status
of project, projected start date: “projected milestones/benchmarks tied to construction schedule,
projected completion date, projected on-line date, historical spending information, current year
to date spending information ap to last date of reporting quarter, anticipated future spending,
any information on Se oe eot over-runs, ;

IN CITY COUNCIL JUNE 29, 2001. “READ ONCE AND PASSED, YEAS THIRTEEN.

IN CITY COUNCIL AUGUST 8, 2001. READ A SECOND TIME AND AGAIN PASSED,
YEAS TWELVE, NAYS 0.

APPROVED BY THE MAYOR AUGUST 17, 2001, HE CERTIFYING ON THE ORIGINAL
ORDER THAT THE FOREGOING LOAN ORDER IS NOT, IN HIS OPINION, TO
MEET A CURRENT EXPENSE.

ATTEST: V | Age

ROSARIA SALERNO
CITY CLERK

0754
1070,
10426

106¢

/ ‘Attachment

l Long Island Power Plant Embankment
2 Marine Docking Facility

: Capital Asset Study

Street Tree Planting FY02 - 04

CITY OF BOSTON nes EE

SubClass:
IN CITY COUNCIL Program: 1066

ORDERED: That the sum of Eleven Million Six Hundred Seventy Thousand Dollars
($11,670,000) be, and hereby is, appropriated for school projects, including the planning,
designing, acquiring land for, constructing and originally equipping structures and facilities and
for remodeling, reconstructing, or making major alterations, additions and major repairs to
existing facilities including original equipment and landscaping, including the planting of
shade trees, paving and other site improvements incidental or directly related to such
remodeling, reconstruction or repair for the purpose of the School Department; and that to mee
said appropriation the Collector/Treasurer be, and hereby is, authorized under the provisions of
Chapter 70-B, as amended, or under the provisions of Chapter 642 of the Acts of 1966, as
amended, or under the provisions of Clauses (3) and/or (3A) of Section 7 of Chapter 44 of the
General Laws, to issue from time to time, with the approval of the Mayor, bonds, notes or
certificates of indebtedness of the City up to said amount, provided that the appropriation
authorized be expended only on those projects as described by name attached herein. Be it

further ordered:

ORDERED: That the Office of Budget Management and the managing department for each
project shall issue written quarterly’capital reports to tHe Boston City Council on all capital
construction projects funded by this loan order, beginning on October 1, 2001 and subsequently
on January 1, Apri] 1 and July 1 of each project. These shall include the following
information:

Written description of projects summarizing activities for the last quarter including but
“not limited to: existing, current and fgture ailthorizatiqn detail, Scope of project, current status .
projected completion date, proj jectestbn-line date, histirical spending information, current eK
to Gate spending information up f6 last date of reporting quarter, anticipated future Seen as
any information on anticipated cost ever-runs.

In City Council June 29, 2001. Read once and passed, yeas 13. .
In City Council August 8, 2001. Read a second time and again passed, yeas 13.

Approved by the Mayor August 17, 2001, he certifying on the original order

that the foregoing loan order is not, his opinion, fo meet a current expens
Attest: f

Rosaria Salerno
City Clerk

September 7, 2001

becomes effective on September 7, 2001 ccordance J, the provisions of

Chapter 108 of the Acts of 1939.
Rosaria Salerno

Attest:
City Clerk

Attaciunent

Boston Latin School
Brunswick Gardens New Middle School
Burke High School Renovation

IS (vt) of By

Mildred Avenue New Middle School ROE Ee A

CITYOFBOSTON kn 7,

Yi ea FY

IN CITY COUNCIL Docket: 0395
Sub-Class: 10414
Program: 1007

ORDERED: That the sum of Two Million Four Hundred Twenty Four Thousand Dollars
($2,424,000) be, and hereby is, appropriated for remodeling, reconstructing, or making
extraordinary repairs to public buildings owned by the City, including original equipment and
landscaping, paving and other site improvements incidental or directly related to such
remodeling, reconstruction or repair for the purposes of the Fire Department, and that to meet
said appropriation the Collector/Treasurer be, and hereby is, authorized under the provisions
of Clauses (3A) of Section 7 of Chapter 44 of the General Laws, to issue from time to time,
on request of the Mayor, bonds, notes or certificates of indebtedness of the City up to said
amount, provided that the appropriation authorized through this order be expended only on

those projects as described by name attached herein.

In City Council March 14, 2001. Read once and
passed - yeas twelve, nays none
In City Council March 28, 2001. Read a second time
and again passed - yeas eleven, nays none
Approved by the Mayor, Aprii’10, 2001, -he.certifying’.on
the original order that the foregoing loan order
is not, in his opinion, to meet a current expenses.

Attest: -

Rosaria Salerno
City Clerk

I hereby certify that no-petition, :-asking.that.the question of
approving or disapproving the foregoing order be submitted to the
voters, was filed with the City Clerk within twenty days from

April 10, 2001, and the order therefore becomes effective on

May I, 2001 in accordance with the provisions of chapter 108 of the

Acts of 1939. ;
Attest: ae ws

Rosaria Salerno
City Clerk

Attachment

1. Bathroom Renovations

GIIVORBOSTON 2°"

IN CITY COUNCIL eg

Docket: 0394
Sub-Class: 10413
Program: 1019

ORDERED: That the sum of One Million Nine Hundred Sixty Nine Thousand Five
Hundred Dollars ($1,969,500) be, and hereby is, appropriated for fire alarm communication
installations and for the purpose of extending and improving such installations; and that to
meet said appropriation the Collector/Treasurer be, and hereby is, authorized under the .
provisions of Clause (14) of Section 7 of Chapter 44 of the General Laws, to issue from time
to time, on request of the Mayor, bonds, notes or certificates of indebtedness of the City up to
said amount, provided that the appropriation authorized through this order be expended only

on those projects as described by name attached herein.

In City Council March 14, 2001. Read once and
Passed - yeas twelve, nays none
In City Council March 28, 2001. Read a second time
and again passed - yeas 11, nays none
Approved by the Mayor April 10, 2001, he certifying on
the original order that the foregoing loan order
is not, in his opinion, to meet a current expenses.

Attest: a .

Rosaria Salerno
City Clerk

I hereby certify that no petition, asking that the question of
approving or disapproving the foregoing order be submitted to the
voters, was filed with the City Clerk within twenty days from
April 10, 2001, and the order therefore becomes effective on

May 1, 2001 in accordance with the provisions of chapter 108 of the

Acts of 1939.

Rosaria Salerno
City Clerk

Attest:

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Revenue Estimates and Analysis

OVERVIEW

The FY02 Budget is supported with $1.770 billion
in recurring revenue, an increase of 4.1% over the
FY01 Budget (excluding non-recurring revenue).
The budget also includes $1.9 million in non-
recurring revenue. FY02 will represent the ninth
straight year of revenue growth for the City after
adjusting years FY96 and prior for the loss of City
hospital revenue. (Figure 1.) The trend of positive
revenue growth for Boston is linked directly to
continued strong property development in the City
and growth in the state, regional and national
economies.

% Change
8%

-2%

993 '94 '95 '96 '97 '98 '99 ‘00 ‘01 ‘02

Annual Change in City Revenues

FY93 - FY02 Recurring Revenues
“Adjusted for DHH
Figure 1

This chapter begins with a review of national and
state economic trends that will impact Boston in
FY02 and beyond. It is followed by an analysis of
recent state budget trends and related
implications for state aid, the City’s second largest
revenue source. Finally, a detailed discussion of
the property tax levy, the City’s largest revenue
source, is presented. Net property tax and state
aid together make up 80.3% of total City revenues
and their continued stability is becoming more and

Revenue Estimates

and

FY'96* FY'02
OTHER REVENUE

NET PROPERTY TAX LEVY &
STATE AID

Net Property Tax Levy and
State Aid as a Percent of
Total Revenue

*includes DHH

Figure 2

more critical in determining the City’s ability to
deliver adequate services. (Figure 2.)

THE NATION

The United States is currently experiencing a
period of economic uncertainty with falling stock
indexes, flagging consumer confidence, fluctuating
short-term interest rates, and a large income tax
cut now in effect. Real gross domestic product
(GDP, preliminary) grew only 0.2% in the second
quarter of 2001, down dramatically from 5.7% in
the second quarter of 2000. Real GDP is expected
to remain flat or decline further over the course of
2001 before recovering in 2002. The seasonally
adjusted unemployment rate in the U.S. was 4.5%
in June 2001, sharply up from 4.0% a year earlier
(Figure 3.). The U.S. consumer price index rose
3.3% in the year ending June 2001, down somewhat
from 3.7% for the year ending June 2000. The
largest increase came in the form of higher fuel
and utility prices across the nation, which were up
12.2% compared to only 6.8% over the same period
last year.

The Federal Reserve was able to detect
imbalances in the economy in 2000 that would

Analysis 719

bring inflation if left unchecked. Therefore, last
year the Federal Reserve began raising short-term
interest rates to slow the growth of the economy
and lower the risk of inflation. Since then it
appears that the increase may have been too much
as the Federal Reserve has decreased short-term
interest rates three percentage points since
December 2000, the federal funds rate now stands
at 3.75% in June, and the Fed appears poised to
implement further cuts to stimulate the economy
and avoid recession. The Federal Reserve action
may be more or less aggressive depending on the
combined effects of tax rebate checks mailed to
taxpayers this summer, the delayed effects of
earlier Fed actions, and the continued mild
increases of consumer prices.

Lower interest rates speed the economy by making
money less expensive to borrow for such things as
home purchases. The conventional 30-year fixed-
rate mortgage in June 2001 was 7.12%, down from
8.06% a year earlier. Mortgage rates could
continue to fall if the Federal Reserve lowers
interest rates again. Mortgage rates are
historically very low which will hopefully help
extend the recent healthy real estate market trend
which is helping to keep the economy out of
recession.

Due to the recent health of the national economy,
federal tax revenues have been very strong over
the last couple of years. Much of the old issue of
how to eliminate the federal budget deficit has
been replaced by debate around how to spend the
surpluses that will be available. The Congress and
the Bush administration agreed on nearly $1.4
trillion in tax cuts over ten years, starting with tax
rebate checks to be mailed to taxpayers over the
summer totalling nearly $40 billion. Depending on
whose projections are correct, the states may have
to worry about less federal funds coming in the
future due to surpluses not materializing as a
result of a slowing economy and shrinking federal
revenues.

THE COMMONWEALTH

Overall, economic growth in Massachusetts during
2001 has slowed and employment growth has
slowed as a result. Massachusetts seasonally
adjusted non-farm payrolls showed a gain of 50,100
jobs in June 2001, or 1.5% over the prior June, but

8 0

Revenue

only .4% over December 2000. This is down from an
annual gain of 87,800 jobs in 2000.

The Massachusetts seasonally adjusted
unemployment rate for June 2001 was 3.4%, up
from 2.7% a year earlier. (Figure 3. )

5.0%
4.8%
4.6% po
4.4% = oh AUnited States j
ft Tee EN Nak a ary NN.
4.0% MMA. pl

3.8%
3.6%
3.4%
3.2%
3.0%
ae ie ee ee
2.6%
odeh in

2.2%
Jun-97

So s Wee Seah a ROAR aM,
aa

Vay,

Massachusetts

Jun-98

Jun-99 Jun-00 Jun-01

Unemployment Rates
FY97-FYO1
Seasonally Adjusted

Figure 3

In 2001 through June, there were also sharp
changes in the Massachusetts construction
industry. An index of the value of construction
contracts in Massachusetts declined 54% from a
spike in June 2000 and settling to a more normal
level close to the average of the prior three years.
Nonresidential construction contract values
declined by 62% while residential contract values
grew by 37%. The residential growth was stronger
than the .4% annual increase from 1999 to 2000,
and much stronger than the 18% percent decline
in annual growth in 1999.

Massachusetts personal income continued to rise
through 2001. Earnings growth by industry were
strongest in construction followed by services and
then transportation and utilities, with the first two
showing double-digit percentage gains.
Massachusetts seasonally adjusted total personal
income growth was 6.5% in the first quarter of
2001 over the same quarter of 2000, significantly
below the 10.8% growth recorded a year earlier,
and the same as the growth of 6.5% in the first
quarter of 1999. Most of this change has been
driven by the wage and salary component of
personal income.

ErSttuinmednt sess

and Analysis

The Massachusetts economy has been changing
from an economy dependent on defense and other
types of manufacturing to a service economy. In
1980, manufacturing industry employment
accounted for approximately 25% of total non-farm
employment in Massachusetts, by 1990 it
accounted for 17.5%, and by 2000 it accounted for
only 13.1%. Meanwhile, in 2000, employment in the
finance, insurance, real estate, and services
industries accounted for 43.3% of total non-farm
employment in Massachusetts, up from 37.8% in
1990 and 30% in 1980.

At the cutting edge of the service economy are
some of Massachusetts strongest growth sectors:
high technology, biotech, health care, financial
services, and education. Route 128 has become
well known nationally as a leading high technology
area while Boston and Cambridge have become
home to several leading biotech companies.
Massachusetts has always been a leader in health
care, from the first public demonstration of
anesthesia at Massachusetts General Hospital in
1846 to the proliferation of managed care.
Recently, several hospital expansions, alliances
and mergers have occurred, ensuring a future
leadership role in health care for Massachusetts.

The Commonwealth is also home to many leading
financial service institutions including John
Hancock Mutual Life Insurance, Putnam
Investments, the Prudential Insurance Company,
and Fidelity Investments. Beginning with the first
mutual fund in the United States, which was
started in Boston, the Commonwealth has
attracted leading mutual fund and other financial
services companies.

The Massachusetts economy is helped immensely
by the numerous public and private colleges and
universities within its borders. The largest of these
institutions are Harvard University, Massachusetts
Institute of Technology, Boston College, Boston
University, Northeastern University, and the
University of Massachusetts. With the national
movement toward a service economy requiring
advanced education, Massachusetts is well
positioned for the future.

THE COMMONWEALTH BUDGET

Over the last nine years, the Commonwealth has
been successful in balancing its budget. This has
given the Commonwealth the capacity to support
an adequate and diversified local revenue base for

Reerve eeneuves Eysitriimbaitrers

and

municipalities although recently growth in state
aid has slowed and municipalities are primarily
reliant on property tax for revenue growth. The
following summarizes the Commonwealth’s budget
situation with the purpose of reflecting upon the
Commonwealth’s capacity to continue to provide
growth in its local aid program for cities, towns
and regional school districts.

The state legislature has not agreed on a final
FY02 Budget. Indications are that the House and
Senate have some important issues to finalize
before passage. In addition, concerns over the
economy and stalling state tax revenue may result
in difficulty setting priorities and executing
spending cuts. The City’s budget is based on the
Governor’s budget submitted in January and the
City may be at risk of losing substantial funds if
parts of the House budget remain intact in the
final state budget. The City continues to carefully
monitor budget negotiations as they progress.

The Commonwealth has tended to build its
budgets cautiously the last several years by being
relatively conservative in its revenue estimates.
This definitely has played a role in the strong
financial condition of the Commonwealth.
According to the Governor’s FY02 Proposed
Budget, total FY02 revenues are expected to be
$22.639 billion, an increase of $579 million from
FY01 projected revenues of $22.060 billion. This
growth is net of tax cuts valued at nearly $700
million in FY02.

With the Commonwealth running large budget
surpluses over the past few years, tax cuts
continue to occur. In July 1998, the Legislature
and the Governor worked out a tax cut that
included a doubling of the personal exemption and
a reduction in the unearned income tax rate from
12% to 5.95%. In the FY00 Budget, the Governor
signed into law a reduction of the income tax rate
from 5.95% to 5.75% over three tax years. The
Governor’s FY01 Budget recommended a reduction
in the tax rate on earned income and the interest
and dividend components of unearned income to
5.0% over three tax years, which was later passed
by referendum in November of 2000. The FY02
Budget includes the above rate cut and some
smaller targeted tax cuts taking effect in tax year
2001 such as; a refundable local property tax
credit for low income senior citizens, an increase
in the rental deduction, a new deduction for

Avniay ity: sits 8 1

charitable donations, and a credit for developers of
low income housing.

On the expenditure side, the Commonwealth has
built its FY02 Budget with conservative spending
plans. In the Governor’s proposed FY02 Budget,
projected expenditures in FY02 total $22.550
billion, a $1.073 billion increase over FY01 GAAP
basis expenditures of $21.477 billion.

In the Governor’s proposed FY02 Budget, Chapter
70 education aid increases $171 million, a 5.8%
increase over actual FYO1 aid. In FY93,
Commonwealth officials, driven by practical
considerations and availability of resources,
reinstated increases in local aid in the form of aid
earmarked for education. This period of increases
followed three years of significant local aid
reductions which played a key role in the
Commonwealth's return to a balanced budget. The
Commonwealth’s annual expenditure for direct
local aid has increased from $2.091 billion in FY92
to the $5.172 billion proposed in the Governor's
FY02 Budget, an increase of 147%. Over the same
time period, Boston’s local aid increased 51.4%.
The following section looks at Boston’s experience
with local aid in detail.

STATE LOCAL AID

Local aid refers primarily to distributions from the
Commonwealth to municipal general revenues for
Chapter 70 education aid, additional assistance
and lottery aid. The amount of these funds to be
distributed is listed on each community’s cherry
sheet (a listing of a city or town’s local aid that is
printed on cherry-colored paper) along with other
relatively smaller Commonwealth programs such
as library aid, school construction and
transportation reimbursements, and highway
funds. The City received local aid from the
Commonwealth totaling $457.3 million in FY99,
$474.9 million in FY00, and has a budget of $485.2
million in FY01. The City expects $497.4 million of
local aid in FY02.

Since FY82, there have been three distinct phases
in state local aid funding policy. From FY82
through FY89, local aid policy was essentially a
revenue sharing response to Proposition 2 1/2, the
statewide cap on local property tax rates and
levies. A reasonable annual increase in local aid
became an essential component in the financial

8 2

Revenue

planning for municipalities. This phase was
followed by significant state aid reductions
implemented during the FY90, FY91 and FY92
budgets. During this period, the Governor and the
Legislature sharply reduced state revenue sharing
with cities, towns, and regional school districts in
order to help balance the state budget. Between
FY89 and FY92, statewide cherry sheet aid
declined $602 million or 20% while all other state
spending increased by $1.5 billion or 15%.

Beginning in 1993 with the passage of the FY94
state budget, the Commonwealth embarked upon a
multi-year commitment to increase and equalize
funding for local education in its local aid
distributions. In general, state local aid during the
FY94-FY01 period has been less favorable for
Boston than the revenue sharing arrangement
during the FY83-FY89 period. To illustrate, the
City’s total state aid between FY92 and expected
FY02 increased by $169 million or 51.4%, while its
total state aid between FY82 and FY89 increased
by $214.8 million or 111.1%. The City’s expected
FY02 state aid increase of $12.4 million represents
a 2.6% increase over FY01, up slightly from a $10
million or 2.1% increase in FY01 and down from
the $17.6 million or 3.8% increase received in
FY00.

The Governor's budget for FY02 increases
education aid by $171 million, an increase of 5.8%
over FY01. The City received Chapter 70 education
aid totaling $178.2 million in FY99 and $186.2
million in FY00 and $197.5 million in FY01. The
City will receive $205.6 million in FY02, an
increase of 4.1%. FY00 was the last year of the
statutorily established funding schedule for
education reform. There has yet to be established
a post-FY00 funding schedule. A vital component
in the City’s delivery of quality public education in
the near-term is strong financial support from the
Commonwealth.

A key component of the Commonwealth's
education reform efforts are the charter schools.
The current educational aid is delivered in tandem
with state-mandated costs for charter schools.
Charter schools, which are granted charters by the
State Board of Education, are publicly funded
schools administered independently from local
school committee and teacher union rules and
regulations. There are two kinds of charter
schools, the Commonwealth charter school and

Eqs) t ikmiace ees

anid BAinsa byes tes

the Horace Mann charter school. The former is a
school outside the local public school system and
the latter is part or all of a school in the public
school system. Unlike a Commonwealth Charter
school, Horace Mann charter school budgets
remain part of the public school budget. In
addition to the Board of Education, the local
school committee and local bargaining agent must
approve Horace Mann charter schools.

There are nine Commonwealth charter schools
currently operating in Boston, three outside
Boston available to Boston residents, and one
more is scheduled to open in Boston in September
2001. In addition to the Commonwealth charter
schools, there are also two Horace Mann charter
schools operating in Boston. There are currently
2,602 Boston resident students attending charter
schools and the City expects that number to grow
to approximately 3,040 in FY02.

Before FY99, all charter school tuition was drawn
directly from the City’s Chapter 70 aid. This draw
on the City’s education aid totaled $10.9 million in
FY98. Under recent amendments to the charter
school law, the Commonwealth will pay to the City,
as reimbursement for Chapter 70 aid reductions,
100% of tuition for new charter school students the
first year, followed by 60% of tuition and tuition
increases the second year, 40% of tuition and
tuition increases the third year and 0% of tuition
and tuition increases thereafter. The net
expenditure impact of the charter schools in FY00
was $12.1 million after a $5.2 million
reimbursement from the Commonwealth. The City
has budgeted $14.1 million to be the net
expenditure impact of the charter schools in FY01
after receiving a $10.5 million reimbursement from
the Commonwealth. The City expects $18.0 million
to be the net expenditure impact in FY02 after a
$10.5 million reimbursement, this assumes current
law rather than the Governor’s budget proposal to
reduce reimbursement to 50% of charter school
tuition in the first year only. In the long term, it is
assumed that the charter schools that thrive will
increase overall enrollment, which in succeeding
years will increase funding for the school district
in the Chapter 70 formula and mitigate the
negative fiscal impact of charter schools on the
City’s traditional public schools.

Lottery aid for the City, as for most municipalities,
has grown steadily over the last few years as a
result of a state decision to phase-out the lottery

Rev eimnilite SEs tiemiatiaze:s

cap and reverting to the practice of returning all
lottery profits to the cities and towns. FY00 was
the fifth and final year of the state’s plan. The
City’s lottery aid was $55.6 million in FY99 and
$63.1 million in FY00. The City expects that FY01
lottery aid will exceed the budget estimate of $60.7
million due to a $4.5 million supplemental lottery
aid distribution. The City expects to receive $64.4
million in lottery aid in FY02. The current lottery
formula is not favorable to the City because it
distributes lottery aid increases based inversely
upon each municipality's relative per capita
property wealth. The City receives a smaller
percentage share of lottery aid than its share of
the state population, and dramatically less than
the share of lottery proceeds derived from sales in
Boston. Nevertheless, lottery aid has been an
important source of revenue growth, aiding the
City’s efforts to sustain adequate municipal
services. During the last four years, Boston’s
lottery distribution has reflected both lottery profit
growth and the phasing out of the diversion of
lottery funds to the Commonwealth. Beginning in
FY01, the City’s lottery distribution reflects only
profit growth in the lottery.

PROPERTY TAX LEVY

The property tax levy has been the City’s largest
and most dependable source of revenue growth
during the past 17 years. In FY01, the net property
tax levy was $873.8 million, providing 51.6% of all
City recurring revenue, with an increase to $924.7
million expected in FY02. According to current
estimates, the net property tax levy will account
for 52.3% of total recurring revenue in FY02.

The increases in the property tax levy have been
steady and consistent from FY85 to FY01, ranging
from $28 million to $52 million. However, because
of the increasing property tax levy base, the $29.9
million increase in FY85 represented an 8.9%
increase, while the $51.9 million rise in FY01
represented 6.0% growth. It is important for the
financial health of the City that the property tax
levy continue to grow but its future growth, as
explained in more detail below, is not guaranteed.

anid Ainalys is 8 3

property tax levy to no more than a 2.5% increase
over the prior year’s total levy with certain
provisions for new growth and construction.
Finally, Proposition 2 1/2 provides for local
overrides of the levy limit and a local option to
exclude certain debt from the limit. The City of
Boston, however, has not voted to either override
the levy limitations or exclude any debt from the
limit.

Proposition 2 1/2, as amended in 1991, allows
growth in the levy beyond the 2.5% limit for any
new properties and any increases in property
valuations that are not related to municipal-wide
revaluations. This limitation is more flexible than
the original limitations on allowable new growth
and has helped to strengthen revenue growth in a
budget that does not have a very diversified
revenue base.

In each year since FY85, the City has increased its
levy by the allowable 2.5%. These increases have
grown as the levy has grown, beginning in FY85 at
$8.4 million and reaching $21.6 million in FYO1.
During these same years, the levy has also been
positively impacted by taxable new value,
especially from new construction that has added to
the tax base. The amount levied from taxable new
value is estimated at $30.2 million in FY02. The
combined effect of the allowable 2.5% increase and
the taxable new value is an average annual levy
increase from FY98 through FY01 of $42:2 million
or 5.2%, and a projected increase in FY02 of $53.1
million or 5.8%.

From FY85 through FY89, assessed property values
in Boston increased at an average annual rate of
about 22%, far outpacing the capped growth in the
levy. Most of this increase was due to appreciation
in the value of existing properties. This disparity
between value appreciation and levy growth
caused a significant downward trend in the
property tax rate. The City’s effective property tax
rate in FY84 was 2.5%. By FY89, the effective
property tax rate had fallen to 1.4%. When the
disparity between growth in value and growth in
the levy flows in this direction, the City’s property
tax base becomes more protected (i.e. more
distant from the 2.5% limit).

What occurred in the Boston real estate market
beginning in 1988 significantly reversed the FY85
through FY89 property tax trends described above

8 4

Revenue

(which reflect real estate activity in calendar
years 1983 through 1987). As economic activity
slowed, Boston’s real estate values leveled off.
Then, as the New England region experienced a
deep recession, activity in both the commercial
and residential markets slowed more dramatically.
Office vacancy rates increased and downtown
development came to a near standstill.

All of this was reflected in the fourth citywide
revaluation, establishing values as of January 1,
1991 at $29.8 billion. This represented an 18.1%
decline from the prior years total taxable value.
This was followed by an 8.4% trending down for
January 1, 1992 values at $27.8 billion and a 1.9%
decline for January 1, 1993 to $26.8 billion. The
January 1, 1994 values, established by the fifth
citywide revaluation, showed a 5.0% increase to
$28.1 billion. This was followed by increases in
taxable value of 4.5% and 5.5% in the following two
years. The sixth citywide revaluation that
established values as of January 1, 1997, showed a
9.0% increase to $33.8 billion. This was followed by
increases in taxable value of 6.8% to $36.1 billion
in FY99 and 10.8% to $39.9 billion in FY00. The
seventh citywide valuation that established values
as of January 1, 2001, showed a remarkable 26%
increase to $50.5 billion in FYO1. These last seven
measures of taxable City property values have
demonstrated recovery and strength in the City’s
real estate market since the significant fall in
values in the early part of the 1990's.

As values decreased in the early 1990s, the City
continued each year to maximize the allowable
levy increase under Proposition 2 1/2. Between
FY90 and FY94, the levy increased each year by an
average of 6.4%. The dramatic decrease in values
brought the effective tax rate (levy / taxable
value) from its healthy low point of 1.4% in FY89 to
2.47% in FY94, dangerously close to the
Proposition 2 1/2 tax rate ceiling of 2.5%. Reaching
the 2.5% cap would have resulted in the allowable
2.5% annual levy growth being reduced in a low
value growth year. However, subsequent to the
seven years of total taxable value increases
described above, the City now has some space
between its FYO1 net effective tax rate of 1.82%
and the tax rate ceiling. (Figure 4.)

Boston’s housing market is currently characterized
by continuing high rental rates and high, but
flattening, single-family home prices. In Boston,

E:s\ tl mea t ‘evs

and Analysis

apartment rents are rising due to increasing
demand and a short supply of rental
condominiums and apartments. The supply of

$PRer Thousand
30

2 3 4 95 96 97 98 '99 00 01
Overall Property Tax Rate
Fy92-FYO1

Figure 4

rental units is down as the sale of previously
rented condominiums removes them from the
rental market. Home prices may be stabilizing, as
the median home price within the City rose to
$352,000 in June of 2001, up only 3.5% from
$340,000 in June of 2000. This compares with a
26% increase in the June 1999-2000 period. The
United States home price index grew

approximately 8.5% in each of the last two years.

The continued improvement in the variables that
have influenced investors to go forward with
commercial and residential development projects
may have finally peaked. Although interest rates
are low and, in most parts of Boston, single- family
home prices have risen to very high levels, sales of
existing homes have started to drop and new
residential construction has slowed due to
consumer wariness of economic prospects.
Commercial rental rates have been high and
vacancy rates have been very low, but availability
rates, which include sublet activity, have started
to rise indicating some future easing in the
market.

Demand for office space in Boston has eased some
in 2001. In June, the overall Boston office vacancy
rate was 3.2% up from 1.5% in 2000. Because office
vacancy rates have been so low, rents have risen
(Figure 5.). The average asking rent per square
foot for Class A office space in Boston at year-end

Rre VV eanttaen sees tel Maa teers = ane

2000 was $61.16, up from $43.69 or 40% higher
than a year earlier. During 2000, the average
asking rent per square foot in Back Bay was
$63.49, up from $41.24 in 1999. In the financial
district, the average asking rent per square foot
during 2000 was $64.79, up from $44.97 in 1999
(more recent rents are not available currently).
(Figure 6.)

10%

0%
92 ’93 ’94 ’95 ’96 '97 ’98 ’99 ’00 ‘OT
Boston Office Space
Vacancy Rates (all classes)

1992 - 20012Q
Figure 5

$570) ~yacosssnsorsencetssieeossotuasiossensnaonsesottacsiesssntssstnesensebnaebesannetn

@ Back Bay © Financial District

92 "93 '94 '95 '96

97 ’98 ’99 ’00
Boston Office Space

Asking Rents
92 - 2000
Figure 6

Should the real estate market, which is still strong
but showing signs of peaking, suddenly depreciate
again, the City’s lack of proximity to the 2.5% tax
rate threshold should insulate revenues from an

immediate shock but could, if values are

Analysis 8 5

depressed long enough, impair the growth of the
property tax. This would have serious implications
for the City’s future ability to maintain the current
level of services. The real estate market was
healthy in 1999 and 2000 and will hopefully remain
steady throughout 2001 and 2002.

It should be noted that the City receives
approximately 80% of its revenue from property
taxes and state aid. Should the economy fall into a
recession, poor economic conditions could
pressure the state to cut local aid. Weaker
economic conditions usually hurt the
Commonwealth’s tax collections and force it to
increase spending on social programs. This could
negatively impact the Commonwealth’s ability to
balance its budget without cutting local aid.

Luckily for municipalities, property taxes are a
more stable revenue stream and since values and
the base have been steadily increasing, the levy
limit is not likely to approach a point of reaching
the 2.5% limit, where revenues would be reduced,
even if there were a deep and lengthy recession.

8 6

Revenue

Eesitucmiact aus

acn.d cA In sapiaVesulrs

CITY OF BOSTON
REVENUE DETAIL

FY99 FYO0O FY01 FY02
Actual Actual Budget Budget
PROPERTY TAX LEVY 822,368,024 866,205,891 917,749,944 970,893,693
OVERLAY RESERVE (42,712,325) (41,226,307) (43,906,229) (46,233,033)
Subtotal 779,655,699 824,979,584 873,843,715 924,660,660
EXCISES
Motor Vehicle Excise 29,427,692 36,962,518 37,000,000 40,325,000
40129 Room Occupancy Excise 22,800,000 23,900,000 25,200,000 25,800,000
40130 Jet Fuel Excise 15,530,709 7,607,524 19,550,568 15,800,000
Other Excise 257,000 437,000 345,000 420,000
Subtotal 68,015,400 68,907,041 82,095,568 82,345,000
FINES
Parking Fines 45,112,912 53,550,589 56,100,000 56,300,000
45104 Code Enforcement - Trash 118,403 256,462 200,000 350,000
Other Fines 2,244,656 2,136,956 2,126,700 2,619,400
Subtotal 47,475,970 55,944 007 58,426,700 59,269,400
47151 INTEREST ON INVESTMENTS 17,423,501 21,885,610 20,000,000 19,450,000
PAYMENTS IN LIEU OF TAXES
40169 Massport 10,378,559 10,501,526 10,606,541 10,739,378
Other Payments In Lieu of Taxes 16,170,692 8,386,882 10,590,967 11,077,670
Subtotal 26,549,251 18,888,408 21,197,508 21,817,048
URBAN REDEVELOPMENT CHAPTER 121A
Urban Redev. Chap. 121A Sec. 6A 9,420,715 10,381,018 9,948,005 10,141,689
41013 Urban Redev. Chap. 121A Sec. 10 27,087,846 27,266,454 27,996,147 28,700,000
Subtotal 36,508 561 37,647,472 37,944,152 38,841,689
MISC. DEPARTMENT REVENUE
43105 Registry - Vital Statistics 928,805 979,734 980,000 1,000,000
43109 Liens 926,425 710,350 700,000 700,000
43120 City Clerk - Fees 526,462 576,876 560,000 570,000
43137 Municipal Medicaid Reimbursement 15,574,130 10,942,095 11,050,384 12,000,000
43202 Police Services 541,786 497,518 550,000 525,000
43211 Fire Services 2,891,629 2 DAS AGL 2,750,000 2,825,000
43301 Parking Facilities 838,107 1,677,998 825,000 800,000
43311 PWD - Street & Sidewalk Occupancy Fees 3,161,653 2,859,939 3,000,000 3,000,000
43797 PWD - Fiber Optic Rental Fees 492,893 1,720,639 1,600,000 1,600,000
44002 Tuition & Transportation - Schools 758,363 447,290 550,000 550,000
44101 Library Fees 220,498 176,393 175,000 175,000
44103 Library of Last Recourse 2,700,308 2,516,885 ZO Leo 0
45106 Registry of Deeds Fees 2,790,873 356,077 ) 0
47001 Telephone Commissions - City 89,220 54,595 65,000 70,000
47117 Worker's Comp. Reimbursement 588 956 1,254,697 1,000,000 1,050,000
47119 Settlements 820,466 379,273 500,000 425,000
47131 Pensions & Annuities 2,285,582 632,971 1,800,000 2,015,000
47132 Fringe Benefit & Indirect 936,160 184,707 725,000 3,250,000
47155 Prior Years Reimbursements 2,709,863 Veo LT 2,000,000 2,130,000
47157 Misc. Recovered Revenues 836,646 (500) 0 200
48000 Police Detail, 10% Admin. Fee 1,916,687 2,191,559 2,250,000 2,250,000
48003 Fire Detail, 10% Admin. Fee 314,914 269,349 275,000 275,000
Other Misc. Department Revenue 1,331,790 3,432,761 1,542,676 1,648,726
Subtotal 44,182,219 36,012,689 35,265,385 36,858 926

RGvce nit. 6.0 Stl hel ¢.Suea n.d) Aiwa vs 1s 87

40211
40213
40215
40221
40222
40224
40225
40229
40235

40133
40134
40136

42502
42503

41015
41101
41102
41103
41104
41111
41112
41114
41116
41119
41301
41305
41306
41307
41311
41316

41115

42501

8 8

CITY OF BOSTON

REVENUE DETAIL

LICENSES & PERMITS

Building Permits
Weights & Measures
BTD - Street & Sidewalk Permits
Health Inspections
Alcoholic Beverage Licenses
Entertainment Licenses
Police & Protective Licenses and Permits
Other Business Licenses and Permits
Cable Television
Other Licenses and Permits
Subtotal

PENALTIES & INTEREST

Penalties & Interest - Property Tax
Penalties & Interest - Motor Vehicle Excise
Penalties & Interest - Tax Titles

Other Penalties & Interest

Subtotal
AVAILABLE FUNDS
Cemetery Trustee
Parking Meters
Subtotal

STATE AID

State Owned Land
R.E. Abatements - Veterans
R.E. Abatements - Surviving Spouses
R.E. Abatements - Blind
Elderly Exemptions
State Lottery Local Aid
Highways
Veterans Services
Additional Assistance
Racing Taxes
School Construction
Charter Schools Reimbursement
Chapter 70 Education Aid
Charter Schools Tuition
School Transportation
Tuition for State Wards
Police Career Incentive
Subtotal

TEACHERS PENSION REIMBURSEMENT

NON-RECURRING REVENUE

Surplus Property

GRAND TOTAL

Revenue

1,549,425,158

E*s t i impatt ess

1,623,856,917

ane d” Aun agivesatas

1,713,663,725

FY99 FY00 FY01 FY02
Actual Actual Budget Budget
11,404,006 18,528,335 14,000,000 15,000,000

137,615 149,545 150,000 150,000

1,355,665 1,500,057 1,350,000 1,400,000

1,050,064 1,088,452 1,300,000 1,100,000

2,266,072 2,296,154 2,325,000 2,325,000

452,792 467,740 475,000 475,000
506,219 455,233 475,000 475,000
936,523 942,629 990,000 975,000

2,554,252 2,845,985 2,900,000 2,850,000

221,688 352,864 380,000 308,000
20,884,895 28,626,995 24,345,000 25,058 000

1,296,780 1,621,780 1,600,000 1,625,000

2,811,533 2,779,293 2,850,000 2,850,000

6,909 226 6,215,832 6,200,000 6,250,000

400 405 0 200
11,017,940 10,617,310 10,650,000 10,725,200

1,588,608 1,636,159 1,678,386 1,778,400

1,500,000 5,030,525 10,000,000 10,000,000

3,088 608 6,666,684 11,678,386 11,778,400

246,884 0 369,912 447 692
211,293 0 Zo ue 198,587
264,150 0 264,150 254,031
25,813 0 24,867 27,937
650,090 577,802 577,802 523,084
55,611,124 63,066,265 60,693,496 64,376,280
836,476 836,476 836,476 836,476
834,730 575,542 602,807 804 291
206,638,214 206,638,214 206,638,214 206,638 214
448,723 441,202 458 333 458 333
13,329,890 17,088,236 19,823,973 18,834,386
2,193,223 5,242,570 30.51 7.626 10,546,893
178,229,434 186,151,815 197,517,540 205,644,684
(13,421,568) (17,322,561) (24,622,304) (28,586, 156)
10,093,175 10,486,610 10,053,226 10,053,226
1,148 446 1,147,832 1,257,638 0
0 0 0 6,318,039
457,340,097 474,930,003 485,217,310 497,375,998
37,283,017 SO71 Ostia 39,000,000 41,400,000
0 0 14,000,000 1,876,000

1,771,456,320

ONDITA. AD.
1630.

ont poy

Innovations in Education

OVERVIEW

Improving public education in Boston requires a
united effort by students, teachers, parents,
communities, schools, and private businesses,
along with City and State officials. FY01
represented the fifth year of the Boston Public
Schools (BPS) five-year education reform plan,
“Focus on Children.” The Superintendent and the
School Committee are currently engaged in
formulating a successor education reform plan,
“Focus on Children II.” This plan recognizes the
goals and accomplishments made in the past five
years, and emphasizes the six essentials of
learning to guide instructional practice to
accelerate the rate of improved student
achievement. BPS continues to make progress
toward attaining its goals of improved teaching
and learning, but a great deal of hard work is still
required. The funding provided in the BPS
Operating Budget and the BPS Capital Plan,
coupled with many successful BPS initiatives, have
provided BPS with the resources necessary to
improve student performance.

Accomplishments in FY01 and Prior Years

Improvements in Student Performance
The BPS has set in place an accountability process

that is designed to improve the entire school
system by focusing on school-by-school planning,
assessing, reporting, and acting on results. The
goal of this accountability process is to promote
ongoing improvement in teaching and learning
within each classroom in all Boston Public Schools
resulting in improved student achievement.

Since the introduction of the Massachusetts
Comprehensive Assessment System (MCAS)
(1998-1999) and Boston’s adoption of the
Stanford 9 (1995-1996), students’ test results in
Boston have improved. On scales that measure
student performance from a low of Level | to a
high of Level 4, standardized tests have shown that
Boston is moving in the right direction. In each of
the last two years, fewer students have tested at

[neankOAVFa {hizoMnss —c17n

Level 1 and more have performed at Levels 3 and

4. In fact, this past year, the rate of improvement

for Boston’s students on the MCAS tests exceeded
the state average.

In addition to student performance, student
attendance in Boston has also improved. Student
attendance is an issue of high importance for the
BPS that has been supported by a change in
student promotion policy. The efforts of the BPS,
Boston Police Department, and the State’s District
Attorney's Office has yielded improvements in
student attendance system-wide. Overall, the
student attendance rate has increased from 88% in
school year 1993-1994 to 92% in school year 1999-
2000.

Successful BPS Initiatives

The resources provided by the City have been
combined with community-based resources and
various external resources to produce the
following tangible results in the Boston Public
Schools:

e Implementing a comprehensive strategy to
improve student achievement through
Transition Services and Math Support Plans;

e Reducing class size;

e Purchasing of textbooks and educational
materials to support curricula aligned with
Boston and state frameworks;

e Establishing nine Pilot Schools and two Horace
Mann Charter Schools;

e Investing in whole school improvement through
the Cohort structure;

e Implementing the recommendations of the task
force on alternative education;

e Providing bus monitors on all buses transporting
students to Early Education Centers; and

e Investing in a variety of infrastructure issues
including facilities maintenance and repair,
human resources reinvention, and technology
support.

These accomplishments are key components in
bringing about whole school change. Details on
these initiatives and additional accomplishments

ENOuuactud (elmo 8 9

are included in the “FY01 and FY02 Initiatives”
section of this chapter.

Initiatives and Plans for FY02

Initiatives in the BPS FY02 Operating Budget

In FY02, the BPS Budget continues to fund many
of the initiatives started as a result of “Focus on
Children.” The FY02 Operating Budget provides
funding for:

e Transition Services Program with its focus on
literacy and mathematics;

e Math Support Plan for improved student
achievement across all grades;

e Class size reductions;

e Smaller Learning Communities in our high
schools:

e Textbooks and educational materials to support
the Arts as a multi-year commitment and;

e Infrastructure issues including a larger funding
commitment for facilities maintenance and
repairs, administrative technology support, and
an applicant tracking system to build on the
gains achieved through our reinvention of
Human Resources.

The FY02 Budget also reflects an increase of more
than $1,000,000 in external funds for textbook
replacement. During the formulation of the FY02
Judget, the Administration strengthened its
commitment to insuring that Boston Public School
students have access to the tools required to
perform at higher levels of achievement.
Unanticipated educational grants from the State
have been earmarked to support this commitment.
In order to ensure progress toward this goal, a
four-point plan has been instituted to address
textbook replacement issues. This plan commits
up to $2,000,000 in FY02 for replacement
textbooks and instructional materials for all BPS
classrooms. BPS will also implement a new
textbook inventory control system that will allow
for improved educator, student, and parent
accountability for the care and use of textbooks.
The City of Boston will engage an outside auditor
to conduct a management audit of textbook
procurement and supply practices currently being
followed by the Boston Public Schools.
Additionally, the Boston Public Library (BPL) is
purchasing a core set of textbooks for each of its
twenty-six branches. This represents a $200,000

commitment funded through the existing BPL
budget for books.

These items are all included in the FY02 BPS
Operating Budget of $636.6 million. More detail on
the FY02 BPS Operating Budget is available in the
Education section of Volume II of the FY02
Budget.

Initiatives in the Five Year Capital Plan, FY02-FY06

The Five Year Capital Plan continues to provide
substantial authorizations for school capital
projects. The FY02-06 Capital Plan includes the
following items:

e Construction of 3 new schools, a K-8 school at
Orchard Gardens, a 6-8 school at Columbia
Road, and a 6-8 school at Mildred Avenue;

e Completion of major renovations at Boston
Latin School;

e Upgrade science labs in two high schools;

e Revitalization of 11 schoolyards;

e Construction for electrical and technology
wiring upgrades at 18 schools; and

e Siting for additional new schools.

In addition to these highlights, the Five Year
Capital plan includes many maintenance projects
for windows, roofs, and boilers at schools across
the City. Additional detail on capital expenditures
can be found at the end of this chapter and in the
Education section in Volume II of the FY02
Budget.

BPS Goals

The BPS implemented a five year education
reform plan, “Focus on Children,” to improve
student achievement. “Focus on Children” serves
as a guide to help bring about whole school
change. “Focus on Children” highlights the
following goals:

e Primary Goal: Improve teaching and learning to
enable all students to achieve high standards of
performance;

e Goal 2: Change the structure of the BPS to focus
on student performance and to serve the
community;

e Goal 3: Provide safe, nurturing, healthy schools
where students receive the support they need to
succeed; and

e Goal 4: Engage parents and the community in
school improvement through a unified,

innovations in Education

collaborative structure and effective
communication.

Within these goals, the School Committee has
outlined three priority areas:

e Student Achievement;

e Instructional Practice through school-wide
professional development; and

e Service delivery.

The BPS has made strides in each of these areas
during the implementation of “Focus on Children’
reform plan. The Superintendent and the School
Committee are currently engaged in formulating a
successor education reform plan, “Focus on
Children II.” This plan recognizes the goals and
accomplishments made in the past five years, and
emphasizes the six essentials of learning to guide
instructional practice to accelerate the rate of
improved student achievement:

e Focus on literacy and mathematics to organize

instruction, assessment of student progress, and

professional development;
e Use student work and data to identify student
needs, improve instruction and assess progress;

e Focus professional development to give teachers

and principals what they need to improve
instruction in core subjects;

e Learn and use best practices for instruction;

e Align all resources with instructional focus; and

e Engage parents, community and partners to
support whole school improvement.

RESOURCES

BPS Operating Budget

The FY02 BPS Budget is a product of the Boston
Public Schools’ ongoing effort to align resources
with educational priorities. This budget
recommendation reflects many purposeful and
difficult decisions. These decisions have been
made in order to allocate resources to priority
areas that most directly affect teaching and
learning.

The FY02 BPS Budget continues to build on the
previous years’ progress. It focuses on improving
teaching and learning for all students by
concentrating resources at the school level in
order to implement citywide learning standards
and whole school change.

Hn no Vialt 1-0 nes) tn

The BPS budgetary decisions are driven by the
development of budget estimates based on
rigorous data analysis and management controls.
The funding necessary for the FY02 increases has
been partially offset through savings from more
cost-effective approaches to program _
implementation.

BPS Operating Budgets, Prior to FY02
In the years leading up to FY02, Boston has been

committed to improving education. The BPS FY01
Operating Budget of $611.9 million is:

e A 5.7% increase over the FY00 expenditures of
$579.2 million, while for the FY01 Budget there
was a 5.2% increase over the FY00 total
expenditures, excluding non-recurring
appropriations;

e 43.8% of the total FY01 appropriations
(excluding fixed costs and non-recurring
appropriations), which is level with the
percentage in FY00;

e A cumulative increase of $203.8 million, or
49.9%, between FY94 and FYO1.

These funding trends continued in the formulation
of the FY02 BPS Operating Budget.

BPS FY02 Operating Budget

In the Mayor’s FY02 Budget, Boston continues its
commitment to improving education. The total
city-funded FY02 BPS Operating Budget is $636.6
million. This budget includes funding for the 8
collective bargaining agreements and employee
agreements that have already been negotiated. It
does not include funding for those agreements
that have not yet been settled. Employees of the
BPS fall under the jurisdiction of 14 collective
bargaining agreements and 2 employee groups that
are not covered by collective bargaining. Notably,
the budget includes funding for the agreement
with the Boston Teachers Union that extends
through August 31, 2003. The city-funded FY02
BPS Operating Budget of $636.6 million is:

e An increase of 4.0% over the FY01 appropriation
of $611.9 million;

e 43.9% of the total appropriations (excluding
fixed costs and non-recurring appropriations);

e Acumulative increase of $228.5 million or 56%
over FY94 operating expenditures.

Evan Cedetclc0 91

BPS Projects in City of Boston Capital
Plans

BPS Capital Projects, Prior to the City of Boston FY02-
06 Capital Plan

The Capital Plan supports the Mayor’s
commitment to education. The City of Boston’s

capital projects prior to FY02-06, included funding
for BPS projects that totaled approximately $250.7
million between FY95 and FY00 or approximately
31% of capital expenditures between FY95 and
FY00. In addition, FY01 expenditures totaled
$57.3 million.

These funding levels continued in the formulation
of the FY02-06 City Capital Plan and have
increased substantially in the last few years.

BPS Capital Projects in City of Boston FY02-06 Capital
Plan

The City of Boston FY02-06 Capital Plan includes
funding for BPS projects that total approximately

$320.9 million. Capital expenditures on schools
will total approximately 46% of all general
obligation bond spending in FY02. The continued
emphasis on new school construction, technology
upgrades and general school renovations are the
key factors that will drive school capital spending
over the next five years.

More detail on school capital expenditures is
available in the Education section of Volume II of
the FY02 Budget.

BPS STUDENTS AND PROGRAMS

Student Enrollment

Student enrollment is the key driver of the BPS
Budget. Allocations of resources at the school level
are determined by the projected enrollment at
each school for the next school year. These
projections are distributed across all of the
programs offered, across all grades, and at every
school. As of December 2000, BPS had 63,134
students enrolled. This represents a decrease of
211 students from the 63,345 students enrolled in
December 1999. Today’s enrollment represents an
increase of about 3.4% since FY 1995, or 2,078
students. (Figure 1.)

ie) 7

20%
B Enrollment Growth
Spending Growth
B%
10%

95 '96 '97 98 '99 00 01 ‘02
Cumulative School Enrollment
Growth vs. Cumulative School
Expenditure Growth
FY95-FY02. Adjusted to FY94 dollars

Figure 1

In FY02, enrollment growth is expected to increase
in the areas of regular education and special
education. A decrease is projected for bilingual
education, continuing a multi-year trend.
Currently 67% of the students are in regular
education programs (including vocational and
advanced work), 15% are in bilingual education
programs, 9% are in mainstream special education
programs, and 9% are in substantially separate
special education programs.

Students currently attend sessions at 130 schools
including 6 early education and learning centers,
71 kindergarten/elementary schools (K-5), 8
elementary and middle schools (K-8), 20 middle
schools, 1 middle and high school (6-12), 18 high
schools (9-12), 8 exam schools (7-12), and 3
special education schools (K-12). The BPS also
has 5 alternative, non-diploma granting programs,
including a college preparatory program for grades
11-12, programs for middle and high school
students with disciplinary issues, and a program
for students ages 20-22.

The Department seeks to ensure equal
educational opportunities and prevent
discrimination and inequalities based on racial,
ethnic, socio-economic, gender, sexual orientation,
or any other reasons. The student population is
ethnically diverse. The current enrollment is 48%
African-American, 28% Hispanic-American, 15%
Caucasian, 9% Asian-American, and less than 1%
Native-American.

ieneGeVcal tl Oune Sealine | Eade UcedetalsOnn

PROGRAMS AND SERVICES

Regular Education

Regular education is comprised of grades |
through 12, kindergarten, and early learning
opportunities. The programs offered under this
area range from early learning and early education
centers to high school programs, from classical
education to technology, from social studies to
international studies, and from advanced work
classes to remedial and alternative education
programs. Regular education students are often
integrated with bilingual and special education
populations. In addition, adult basic education and
evening high school programs are available for
Boston’s adult population.

Bilingual Education

The BPS ensures that bilingual students receive
challenging, rigorous and meaningful instruction
in their first and second language and are held to
the same high standards as their fluent English-
speaking peers. The BPS provides a Transitional
Bilingual Education Program to students with
limited English proficiency. Of the 9,541 students
enrolled in Transitional Bilingual Programs,
approximately 59% are Spanish, 12% are Haitian-
Creole, 8% are Chinese, 8% are Cape Verdean
Creole and 5% are Vietnamese. Programs are also
offered in Portuguese, Somali and Greek.

Bilingual education students are assessed and
placed according to their English language
proficiency. To increase interaction among regular
education and bilingual education students, there
are schools with “two-way programs’ in English
and Spanish. In addition, a number of schools have
implemented their own initiatives to promote
interaction between bilingual and regular
education students.

Special Education

The BPS provides special education services to
approximately 13,000 students. These special
education services are delivered in both public
schools and special education private schools.
Within BPS, over 1,200 special education teachers
work with students with disabilities in meeting the
goals and objectives of their Individualized
Educational Plans (IEPs). In addition to BPS
teachers, two-hundred twenty (220) service
providers, including speech and language

[ae neOsVeal tel sOnen eS 6 ln

pathologists, occupational therapists, and adaptive
physical education teachers provide services as
determined through the IEP process.

All special education services are provided in
accordance with the Individuals with Disabilities
Act (IDEA), Chapter 71B of the Massachusetts
General Laws, Boston School Committee policies,
and specific requests related to courts. Recent
changes in state legislation has been adopted as
Chapter 159 of the Acts of 2000, which uses the
Federal definition of providing “Free and
Appropriate Public Education’ to special
education students.

Currently, 17.4% of Boston Public Schools students
have Individualized Educational Plans. This
represents a decrease from 22% in 1997-98 school
year. The state average is 17% while the national
average for urban school districts is 12-14%.
Though considerable progress has been made in
the area of referrals to special education as well as
a reduction in the number of new students placed
in out-of-district placements, the number of
students placed in substantially separate settings,
or 502.4 prototype students, requires continued
and extensive focus.

56% of Boston’s students with an IEP are currently
served within separate classroom settings. The
national average of students in separate settings is
25% with the state average at 23%.

For the benefit of all of its students, the Boston
Public Schools cannot continue to place an
inordinate number of students directly in
substantially separate settings. This pattern is
both troubling and disturbing from a regulatory
perspective (it indicates a departure from the
least restrictive environment mandate) and a
budgetary perspective (it drives the need for
additional staffing and costs). Still, Boston
continues to make strong progress in providing
appropriate services to students with disabilities.

Support Services

Students in all programs take advantage of the
wide range of the support services in the schools.
The scope of services available to students has
changed and increased significantly. This
expansion of student support is designed to better
the system’s capacity to address the changing
needs of students. School medical services,
psychological services, guidance services, and

Eadsumcedltalsonn 93

other support services are offered across all grade
levels. In addition, collaborative arrangements
with human services and community agencies
supplement the support services offered to
students and their families.

Accomplishments and New Programs

FY01 and FY02 Initiatives

The School Department has been successful in
moving forward with all of the FY01 BPS initiatives
listed in Table 1. Table 2 highlights major
initiatives and plans for FY02. (Tables can be
found at the end of this chapter.) These tables,
however, are not meant to be comprehensive
listings of all achievements or plans of the Boston
Public Schools. Some of the initiatives for FY02
represent the next phase of prior year initiatives,
which demonstrates a school system that is
following through on a multi-year plan of
educational reform. In fact, in many instances, the
BPS is strengthening its commitment to prior
years’ initiatives.

ALTERNATIVE SCHOOL DESIGNS

Pilot Schools

Pilot schools were developed through the
BPS/BTU collective bargaining contract. Pilot
schools, also known as in-district charter-schools,
are established through proposals submitted in a
Request for Proposals process, in which at least
one of the individuals submitting the proposal is a
BPS staff member. The pilot schools are free from
the union contract and School Committee rules
and regulations.

There will be a projected 2,412 students being
educated in Boston’s pilot schools during school
year 2001-2002. Pilot schools can serve as useful
examples of cutting-edge education practices.
However, not all educational methods are
transferable to all classrooms. A large number of
the education initiatives in pilot schools can be
associated with the decisions that can be made
because of the managerial flexibility available to
them at the school level.

The budget for each pilot school is based on the
average per pupil grade level cost. The per-pupil
cost allocated to the pilot schools includes all

9 4

instructional, administrative and support services
costs except for transportation and the cost of
educating private placement students. The per
pupil cost of pilot schools students is part of the
BPS Operating Budget.

Boston currently has the following nine pilot
schools: Fenway Middle College Pilot School;
Young Achievers Science and Mathematics Pilot
School; Lyndon Pilot School; Greater Egleston
Community High Pilot School; the Mission Hill
Pilot School; Harbor Pilot School; New Mission
High; Boston Arts Academy Pilot School; and
Quincy Upper Pilot School.

The City has shown a strong commitment to the
arts by opening a pilot school centered on the arts.
In September 1998 the Boston Arts Academy
opened its doors. The Arts Academy is the result of
a great deal of support and guidance from the Pro
Arts Consortium. About $11.3 million will be spent
on the arts by BPS in FY02 including all funds and
the arts programs at the Arts Academy.

Horace Mann Charter Schools

A Horace Mann charter school represents all or
part of a public school operated under a charter
approved by the local school committee and local
bargaining agent, granted by the State Board of
Education. A charter is granted for five years and
is renewable. Educational assessments are
conducted by the State, and charter schools are
required to comply with state regulations on
testing and assessments. All charter schools will
be required to measure their progress against the
goals set under their charter and make a formal
annual report. In addition, there will be site visits
to assess each charter school’s progress.

A Horace Mann charter school annually submits a
budget request to the Superintendent and School
Committee. The cost of Horace Mann charter
schools is included in the BPS Operating Budget. A
Horace Mann charter school shall not receive less
than it would under the district’s budgetary
allocation rules.

Two schools originally founded as pilot schools
have recently been designated as Horace Mann
charter schools by the Board of Education. These
two schools, the Health Careers Academy and the
Boston Evening Academy are projected to serve
348 students in FY02.

i nen oevrast Wo nese orm . Esdale acter 0 ni

Recent changes in the state laws governing the
number of charters has increased the number of
Horace Mann Charter Schools allowed in the state
from 18 to 48.

Commonwealth Charter Schools
Commonwealth charter schools differ from pilot
schools and Horace Mann charter schools because
the granting of their charter does not require the
approval of the school committee or school unions,
and they do not submit annual budget requests to
school committees. Commonwealth charter
schools are public schools established by charters
granted by the Board of Education independent of
local school committees, in accordance with the
Education Reform Act of 1993. The costs of these
schools are paid for by the sending district of the
students attending the Commonwealth Charter
Schools. The tuition costs for charter school
students who live in Boston are paid for by the City
of Boston, outside of the BPS Operating Budget.

During FY01, 2,602 Boston students were
projected to attend ten Commonwealth charter
schools. In FY02 this enrollment is projected to
increase by 438 to 3,040.

Ten Commonwealth charter schools are located in
Boston: Academy of the Pacific Rim, Boston
Renaissance, City on a Hill, Conservatory Lab,
Frederick Douglass, Media and Technology,
Neighborhood House, Roxbury Preparatory and
South Boston Harbor Academy. In addition, Boston
students attend three Commonwealth charter
schools located outside of Boston. They are
Benjamin Banneker in Cambridge, Somerville
Charter School in Somerville, and South Shore
Charter School in Hull.

Beginning in FY99, there was a change in the
method of financing Commonwealth charter
schools. In FY99, the state reimbursed 100% of the
first year costs for new Commonwealth charter
school students at new or existing Commonwealth
charter schools, 60% of the students’ second year
costs, and 40% of their third year costs. The City of
Boston is scheduled to assume the full tuition cost
by the students’ fourth year.

The City has budgeted $14.1 million to be the net
impact of the charter schools in FY01. The City
expects $18.0 million to be the net impact in FY02,
assuming the current law rather than the
Governor's budget proposal to reduce

[Lnrovatign.s i£n

reimbursement to 50% of charter school tuition in
the first year only.

EXTERNAL RESOURCES

External Funds

Overall, the BPS is projected to receive $113.5
million in external funds in FY02. External funds
are received through formula grants
(entitlements), competitive grants,
reimbursement programs, revolving accounts, and
other grants. Compared to FY01 funding, the
projected amount for FY02 represents a decrease
of approximately $520,000 or less than a half of
one percent. This projected decrease is, in large
part, the result of reasonably conservative
estimates, pending finalization of the state
legislative process and the determination of school
district allocations based on competitive
processes.

External funds are important to the overall
success of the Boston Public Schools. They provide
a source of funds that are targeted for specific
purposes that enhance teaching and learning.
They are aligned with the general fund budget to
support an all-funds approach to budgeting. An
example of this is the resources provided for
professional development, an essential component
of whole school change. The BPS has pursued
expansion of professional developrnent on several
fronts: the Annenberg Challenge Grant, the Boston
Plan for Excellence, and the Eisenhower
Professional Development funding. These
programs provide teachers with many of the latest
teaching techniques, best practices and
opportunities for coaching, mentoring, and
common planning time. This is possible using an
all-funds approach, with a variety of matching
requirements, in many of these areas.

Another example of the educational support
received from external entities is the work of the
Pro Arts Consortium, which has helped form the
BPS Arts in Education policy. Over 75 professional
development workshops were offered to teachers
to help support the integration and infusion of arts
activities into all core areas of the curriculum.

Students take advantage of more than 50 special
arts initiatives (programs, exhibits, performances,
festivals, etc.) throughout the system. These
initiatives are in the areas of creative writing,

Ea ieee at hon 95

dance, music, theatre, and the visual arts.
yenerally, these opportunities are possible due to
the assistance of grants, material donations, and
volunteers.

Chapter 70 Aid

The Education Reform Act of 19938 is a multi-year
commitment by the State to increase and equalize
funding for local education. Since the FY94 state
budget, the Education Reform Act’s financing
formula has affected the amount of education aid
the City has received. The Education Reform Act
has also required the City to spend at or above the
education maintenance of effort, which it has
done. The City of Boston received $66.6 million in
FY94, $81.6 million in FY95, $92.1 million in FY96,
$115.5 million in FY97, $143.9 million in FY98,
$178.2 million in FY99, $186.2 million in FY0O,
$197.5 million in FYO1, and $205.6 million was
proposed in the Governor’s FY02 state budget. The
average yearly increase between FY94 and FY02
has been $17.3 million.

The Education Aid Formula has been reviewed
during FY01. The Cellucci/Swift administration is
seeking to address issues of high growth
enrollment and the artificially low enrollment
factor for special educational students. In
addition, the City is seeking amendments to the
formula in order to recognize the additional costs
of educating low income and limited English
proficiency students.

The FY02 Governor’s State Budget (House 1)
includes $205.6 million in Chapter 70 Aid for
Boston, an increase of $8.1 million over FY01. The
FY02 State Budget increases Chapter 70 Education
Aid statewide by $171 million.

Based on the FY02 Governor’s State Budget,
between FY94 and FY02, the City will have
received an increase of $139 million in Chapter 70
Aid as compared to the $227 million by which the
City has increased the School Department budget
in the same time period. (Figure 2. )

The City receives education aid as part of its total
state aid. It is passed directly to the City’s general
fund. As a source of revenue, the Education Aid to
Boston proposed in the Governor's State FY02
Budget, supports only about 28.1% of the total

Millions of Dollars
F250 apr

@ Chapter 70 |

6 School Spending

$200

$60

$ 100

$50

95 '96 '97 '98 '99 00 01 ‘02
Boston's Cumulative Chapter 70
Growth vs. Cumulative School
Expenditure Growth

Figure 2

funding for the proposed FY02 BPS Operating
Budget (excluding charter school tuition, net the
House 1 reimbursement. )

Private Partnerships

The BPS has continued a long-running tradition of
working with numerous independent organizations
to help bring additional resources, expertise, and
guidance to the youth of Boston and BPS students.
It is an important goal of the School Department
that each school will have established a
partnership with not only a college or university,
but also with a business or foundation, arts or
cultural organization and health or human
services provider.

According to the Private Industry Council (PIC),
far in excess of $20 million is contributed by
companies through in-kind contributions and
services, and student wages. Some examples of
these types of partnerships are:

Summer Jobs Program - Over 1,000 companies
participate in the summer jobs program, with
many businesses offering multiple positions to the
youth of Boston. Approximately 11,000 jobs were
provided to Boston’s youth in the summer of 2000;
a large number of those jobs were provided
through the PIC.

Technology Initiative - Over 100 businesses have
contributed in the form of direct partnerships with
the schools and other forms of system-wide
assistance.

Lenya Ob Vea) tio; nes) Bip dele cRartemonn

ReadBoston Initiative - Every week 1,000
volunteers are tutoring children in reading
through the ReadBoston Initiative.

In addition to business partnerships, the BPS is
the beneficiary of a consortium of higher
education institutions. According to the Boston
Higher Education Partnership, 28 colleges and
universities have formed a consortium that
provides the largest amount of funding and
services to a single urban school district in the
entire country. This steadily increasing assistance
comes in the form of scholarships, pro-bono
assistance, and external grants.

In addition to college, university and business
partnerships, the School Department is also
striving to strengthen partnerships with arts and
cultural institutions and health and human
services providers. According to the Boston
Cultural Partnership, over 60 cultural
organizations, ranging from internationally-known
cultural institutions to community based
organizations to individual artists, offer programs
to 95% of Boston Public Schools. About 74% of the
students served in these programs are at the
elementary level.

FORMAL BUDGET PROCEDURES

Governance

The seven-member Boston School Committee is
appointed by the Mayor to staggered terms and
serves as the policy-making body of the Boston
School Department. This structure was affirmed
by the voters of the City of Boston in a referendum
held on November 5, 1996. The Committee
appoints a superintendent who serves as the chief
executive officer of the Boston Public Schools. The
superintendent is responsible for management and
supervision of the public schools. The
superintendent reports directly to the School
Committee and also serves as a member of the
Mayors Cabinet. At each school, school-site
councils have been established. The school-site
councils consist of the building administrator,
parents, teachers, representatives of collaborating
institutions and a student at the high school level.
The council’s role is to assist the principal or
headmaster in decision-making processes.

nine ceveds tet Omneseenlt n

The Operating Budget Process

The operating budget serves as an operational
plan, stated in financial terms, for carrying out the
goals of the school system. The operating budget is
developed in accordance with the goals and
objectives approved by the School Committee. It
is developed based on extensive input from
principals and headmasters, school site councils,
the Superintendent's Leadership Team, and the
larger school community. The budget reflects
what the Boston Public Schools seek to achieve
during the next fiscal year based on available
resources.

The public school operating budget is developed
under the following statutory schedule:

The Superintendent shall submit to the School
Committee an annual operating budget for the
next fiscal year by the first Wednesday in
February.

The School Committee shall submit to the Mayor
estimates of the next fiscal year’s operating budget
by the fourth Wednesday in February.

The School Committee may adopt, reject, reduce
or increase any item in the Superintendent’s
recommended operating budget. If the School
Committee fails to take action on the
Superintendent’s recommended operating budget
by the fourth Wednesday in March, the budget
recommended by the Superintendent shall be
deemed as if approved by the School Committee.

After School Committee approval of the next fiscal
year’s annual budget, the Superintendent shall
submit the budget to the Mayor who may approve
or reduce the total recommended budget, but who
may not allocate among expenditures.

The Mayor must submit the school’s operating
budget to the City Council for appropriation.

The City Council shall vote on the total amount of
the appropriation requested by the Mayor. The
City Council shall not allocate the appropriation
among expenditures.

CAPITAL IMPROVEMENTS

Capital Improvements

A major focus of the FY02-FY06 Capital Plan is to
ensure Boston’s educational facilities are
equipped to meet the needs of the City’s families.

EA Cn tieGratallO) nl 97

As a result, $320.9 million is outlined for school
facilities and equipment in the Five Year Capital
Plan. In FY02, $43.7 million in new authorization
was approved for BPS needs, including additional
funds for the construction of three new schools,
technology enhancements, accreditation, and
general improvements.

Between FY95 and FY00, $250.7 million in capital
dollars were expended for school projects. In FY01
capital expenditures for schools totaled
approximately $57.3 million. Exterior and interior
renovations to school facilities are underway
throughout the City’s neighborhoods, including
new roofs, roof repairs, masonry repointing,
window replacements, building system upgrades
such as HVAC, fire alarms, lighting, and electrical.
Construction will begin at eleven school yards in
FY02.

Capital investment in high schools has resulted,
once again, in all schools either maintaining or
improving their accreditation status in the last
year. The science laboratories at Dorchester High
School were updated and renovated in FY01. The
science labs at Brighton High School and South
Boston High School are scheduled for upgrades in
FY02. The City will commit an additional $1.2
million to the Humphrey Occupational Resource
Center to ensure compliance with Chapter 70
vocational education requirements.

The City has made great strides towards achieving
the Mayor’s goal of adding technology throughout
the schools. Complete electrical upgrades and
technology wiring began in FY99. The plan calls for
schools to receive appropriate electrical and
technology wiring upgrades in the coming years.
Fortunately, some of the technology work is
discountable at a rate of 80-90% through the
Federal Communications Commission Universal
Service Fund.

The Capital Plan from FY02 and prior years has
provided for a number of major accomplishments
including:

e Upgrading or reaffirming 10 high schools at full
accreditation since January 1996;

e Becoming the first major urban public school
district in the United States to have all schools
wired to the Internet;

e Providing full electrical and technology wiring
upgrades at 65 schools;

e Completing construction on two major high
school renovations, Hyde Park High and Kast
Boston High;

e Constructing an addition and major renovations
at Boston Latin school;

e Completing the revitalization of 22 schoolyards;
and

e Construction of modular classroom facilities at
the Lyndon Pilot School and the Quincy Upper
Pilot School.

In addition, the FY02-06 Capital Plan includes the
following items in FY02:

e Begin construction on three new schools, a K-8
school at Orchard Gardens, a 6-8 school at
Columbia Road, and a 6-8 school at Mildred
Avenue;

e Prepare schematic design and begin land
acquisition for addition/renovation project at
Burke High School;

e Continue siting analysis for additional new
schools;

e Update science labs at Brighton High School
and South Boston High School:

e Update vocational equipment and program
space at the Humphrey Occupational Resource
Center;

e Begin masonry repointing or window
replacements at 14 schools;

e Replace roofs at 4 schools;

e Replace or upgrade HVAC systems at 5 schools;

e Begin construction on full electrical and
technology wiring upgrades at 18 schools; and

e Begin construction for 11 schoolyards.

These items are highlights of school projects in the
Five Year Capital Plan and are accompanied by
other maintenance projects for schools including,
replacing window balances, upgrading fire alarms
and updating electrical systems.

School Building Assistance

The Commonwealth of Massachusetts School
Building Assistance (SBA) program, managed by
the Department of Education (DOE), is designed
to assist cities and towns in building new schools
or in renovating existing ones. Under the current
program the City is eligible for up to 90%
reimbursement on approved project costs.

Linn OeViea tal Gun Ss” 1 ne *Erdetrcudrcleoen

In July 2000, the state legislature repealed the
former school construction aid program and
enacted Chapter 70B of the General Laws. The
range of reimbursement rates under Chapter 70B
remains unchanged although the method of
determining the appropriate rate is different.
Previously, the reimbursement rate was fixed by
statute for each city and town. Under the current
law, a formula involving equalized property
valuations, per capita income and the percentage
of low-income students in the school district are
the key factors. In addition, projects can earn
additional incentive points for re-using existing
buildings, providing adequate maintenance, using
construction management firms or meeting energy
efficiency standards. For the next five years,
districts with approved desegregation plans will
have ten points added to their reimbursement
rate, and for the five years following that, five
points will be added.

Reimbursement payments are made over twenty
years on a level payment basis. Reimbursement
payments are made to the City’s General Fund and
are included as part of the annual State Aid
package. In FY02 reimbursement payments are
forecast at $18.8 million. Reimbursement
payments due between FY(02-FY06 are forecast at
$86.7 million.

The Technology Initiative and Universal
Services Funding

The City of Boston and BPS have committed to
wiring schools to the Internet and providing
students with access to technology in the
classroom. This commitment involves a vast array
of planning, communication, coordination,
resources, and partnerships among the BPS, City
departments, communities and private companies.

The Federal Communications Commission (FCC)
has established the Universal Services Fund
(USF) to assist school districts with
communications and Internet access,
infrastructure and services.

The USF funding was formerly directed toward
providing telephone companies with incentives to
wire isolated rural areas that would otherwise be
cost prohibitive. As most of the United States is
currently wired for phone service, the FCC decided
to shift the majority of these funds toward helping
schools obtain Internet access.

erie: Vedw te IeOn DeSean

The USF is a fund that reimburses school districts
for:

e Internet Access: periodic charges for
communication lines and charges from Internet
Service Providers (ISPs); and

e Infrastructure Costs Associated with Obtaining
Internet Access: one-time construction costs
specifically related to networking, and incurred
within a school building to wire the building for
technology.

These reimbursable items provide significant
assistance with jump-starting the technology
initiative, however they do not address the
operational costs such as:

e Planning - development and design;

e Power - electrical service and distribution;

e Hardware - computers, printers, and
peripherals;

e Security - hardware lockdown devices and
electronic security devices;

e Consumables - paper, disks, and cartridges;

e Software Licenses;

e Technical Support; or

e Professional Development and Training
provided for staff in and out of the classroom.

These components of the technology initiative are
provided with resources in the BPS Operating
Budget and the City of Boston Capital Plan. The
FY02 BPS Operating Budget includes about $3.2
million for technical support and professional
development. The FY02-06 City of Boston Capital
Plan forecasts spending $1 million for hardware
and software and $8.6 million for network
infrastructure and electrical upgrade in FY02.
These funds are combined with funds and services
received from various partnerships to provide
access and exposure to technology.

The costs to provide access to technology and the
Internet can vary significantly from facility to
facility. Many of Boston’s older schools currently
have:

e No defined conduit in which to run data or
electrical lines;

e Concrete or plaster walls that do not allow for
easy installation of wiring, like modern drop
ceilings;

e Inadequate electrical service to the building;

e Inadequate electrical distribution throughout
the building; and

Eedeuacedutaledmn 99

e Inadequate number of phone lines.

These infrastructure items, combined with the
unique nuances of each school, can dramatically
increase costs. The per-square-foot cost of wiring
an older school with appropriate technology wiring
and electrical service can be 200% or 300% of the
per-square-foot cost of wiring a modern building.

The vast majority of BPS schools are older schools,
with minimal electrical service and distribution.
With these dramatic costs on the horizon, the
Technology Taskforce will undertake an
evaluation of the BPS technology plan. The plan
will focus on evaluating and balancing
programmatic needs and new networking
technologies. The product of this focus will drive
the initiative to continue on the most efficient and
effective path for the future.

Ji One Ae ll Gan S

Education

Table 1: FY0O1

FY01 Initiative

Transition Program:
Focus on literacy and math in transition grades.

Math Support Plan :
Initiate across all grades.

Texts and Instructional Materials :
Purchase in coordination
with curriculum frameworks.

Whole School Change :
Continue implementation of Cohorts.

Human Resources :
Increase the capacity of recruitment.

High School Accreditation :
Replace vocational education equipment.

Alternative Education :
Provide programs in accordance with taskforce
recommendations.

FY01 Accomplishments

Sustained our $20 million commitment to help our
lowest performing students to meet rigorous standards.
with a focus on literacy and math in transition grades.

Built on the successes in improved literacy by initiating a
broader effort in mathematics across all grades.

Purchased new textbooks in World Languages, History &
Social Studies, Classroom Libraries and English as a
Second Language.

Provided financial support to fund a continued
commitment to whole school change in every Boston
Public School through the “Cohort structure.”

A major investment in our Human Resources function
has resulted in a substantially increased capacity to
recruit and hire the highest quality of teachers.

Provided specific support for vocational education
equipment replacement to maintain accreditation status
for vocational education programs.

Expanded opportunities for success for disruptive and
overage students in alternative education settings,
consistent with the recommendations of the Alternative
Education Task Force.

IcReneOs Ved ILOMneSeeti Tie Eds Chart io |

101

Table 2 : FY02

FY02 Initiative

Transition Program:
Focus on literacy and math in transition grades.

Math Support Plan:
Support for improved student achievement across all
grades.

Class Size Reduction:
Reduce class size at all grade levels.

Smaller Learning Communities in our High Schools:
A strategy for reducing dropouts, facilitating
improved instruction, minimizing disruption and
boosting achievement.

Textbooks and Educational Materials: The Arts.

Textbook Inventory Control Plan.

Facilities Maintenance and Repairs.

Administrative Technology Support.

Human Resources:
Introduce an applicant tracking system.

School Climate:
Implement recommendations anticipated from
Superintendent’s Task Force on School Climate.

FY02 Plan

Sustain our $20 million commitment for improved
student achievement in literacy and mathematics.
Increase per capita allocation to schools from $173 to
$188 per student.

Expand support for improved student achievement in
mathematics across all grade levels, with specific
emphasis on introduction of new curriculum, coaching,
purchase of appropriate educational materials, and
professional development of instructional staff.

Reduce class size from 25:1 to 23:1 in grades K-2; 28:1
to 25:1 in grade 3; 28:1 to 27:1 in grades 4 and 5; 30:1 to
29:1 in grades 6-8; and 33:1 to 32:1 in grades 9-12.

Provide increased financial support to our three
intervention high schools (Boston High, South Boston
High and Dorchester High) as part of a comprehensive
plan to build smaller learning communities in all of our
district high schools.

Purchase of $2.4 million in arts materials structured over
3 years. This represents the first time in recent history
that earmarked funding for materials to support the arts
curriculum has been made.

Provide support to enhance the school districts ability to
monitor and control the use of textbooks.

Provide substantial increase in financial support to
address adequate funding for repair and maintenance of
our school facilities. This is the first step in a multi-year
strategy to reach a recognized standard of funding
maintenance and repairs that equals 3% of the operating
budget.

Provide support to build capacity of BPS staff to
effectively leverage the benefits of new financial and
human resources/payroll systems.

Build on the gains made through our Human Resources
reinvention effort through the selection and
implementation of an applicant tracking system.

In conjunction with the Mayor’s and Superintendent’s
multi-agency response to increased levels of
inappropriate behavior among and between students and
adults in schools, the Superintendent has established a
group to look at these issues and present
recommendations. The FY 2002 budget provides
funding to implement these recommendations.

I Nan 0 WV laxt. 1 01n Selina ExdattecrantsinOnn

‘CONDITA AD.
1630. |
Re .

NLUINE DEY

Budget and Performance Goals

INTRODUCTION

High performance, customer satisfaction, and
government responsiveness are the cornerstones
of Mayor Menino’s government. By leveraging the
talents of our diverse community with City
resources and creating partnerships, the City of
Boston provides a wide variety of services,
programs and events each year.

Attaining the Mayor’s goals of improved customer
satisfaction, enhanced government performance
and responsiveness to citizen needs, requires a
budgeting and performance system that assesses
the City’s performance. The City’s program
budgeting and performance monitoring system is a
firm foundation for basic service level information.
This system provides a base of information for
understanding the goals and associated costs of
City services, including both detailed spending
information and promised service levels for all City
departments.

Addressing the Mayor’s focus on accountability
requires an evaluation of how services are

KEY DATES IN THE BUDGET CYCLE

Department proposed budget due to {No requirement
OBM.

School Committee Action on the
annual budget.

Mayor’s proposed budget for ensuing
year submitted to City Council.

701, Acts of 1986

Public hearings are held prior to
budget adoption.

701, Acts of 1986

ACTION REQUIRED CITY CHARTER PRESCRIBED DEADLINE {2001-02 DATES
Superintendent of Schools proposed Chapter 613, Acts of 1987 |On or before the first
budget due to School Committee. Wednesday in February

Mayoral meetings with departments. March 12 — 24, 2001
Chapter 618, Acts of 1987 JOn or before the fourth -
Wednesday in March.

Chapter 190, Acts of 1982
as amended by Chapter

April - June April — June, 2001

City Council action on recommended Chapter 190, Acts of 1982
as amended by Chapter

provided and the quality of those services. Once
resources have been allocated through the budget
process, the City monitors its performance with a
view towards realizing its goals of efficiency,
effectiveness, and service to its residents.
Monitoring performance entails an emphasis on
identifying appropriate methods for measuring the
success or failure in meeting goals or attaining the
desired outcomes. It also means tracking and
monitoring performance over time and using this
information to reassess operations.

This section provides an overview of the City’s
budget cycle, as well as program evaluation and
performance measurement efforts that contribute
to the overall pursuit of excellence.

THE BUDGET CYCLE

The City Charter contains legal deadlines and
actions that must be followed in adopting the
budget. The deadlines and formal actions, as well
as the actual or planned dates for the 2001-02

7-Feb-01
On or before February 16, |16-Feb-01
2001.

28-Mar-01

On or before the second 11-Apr-01

Wednesday in April.

On or before the second 13-Jun-01

Wednesday in June.

Table 1

Budget and

PecCumieOniemnaenecee

Goals 1R0RS

budget development process are shown in Table 1.

Budget Development

The structure of the budget and budgetary process
highlights the need for timely, reliable and useful
information to manage and assess government’s
operating performance. The budget is formulated
using accurate and reliable data on program
performance to strengthen accountability and
improve recognition of the long-term impact of
today’s budget decisions.

Boston integrates goal setting, program budgeting,
and performance reporting processes into a single
annual cycle, linking service outcomes to
resources. The budget cycle begins with the
identification of departmental objectives. The
Office of Budget Management (OBM) works with
each department to set clear performance goals
for the upcoming fiscal year. These goals should
be relevant to the department’s mission and
reasonable in terms of attainment, but still
challenging to achieve. For each objective, the
department should identify at least one key
measure of success or outcome.

Departments must prepare budgets within the
financial parameters established to accomplish
those departmental outcomes and goals that have
been identified as key to meeting the mission. As
such, department managers are ultimately
responsible for determining what level of service
can be supported with the available resources, for
example whether to paint 2 or 17 classrooms in a
public school or whether to maintain or increase
the elderly shuttle ridership.

Department managers define baselines, identify
service trends, and set specific measurable service
levels to be accomplished. This process may
involve adjusting amounts budgeted for programs,
redesigning processes to increase productivity, or
increasing or decreasing programs to adapt to
changing priorities or resources.

With the information on trends in services and
resources, program budget decision packages are
prepared for the Mayor’s approval. The budget
decision packages assist policy discussion held by
defining costs and tradeoffs under alternative
service delivery options.

PE!

Budget

Budget Approval

The program budget, including all departmental
objectives and outcomes, is submitted to the City
Council for approval. During the ensuing budget
deliberations, the City determines what services it
will provide and the manner in which it will
provide them. The final approved budget marks
the Mayor’s commitment to provide the citizens of
Boston with an effectively funded scope of
services.

Accountability for Performance

Budget implementation follows City Council
approval. Throughout the fiscal year, reporting,
evaluation and analysis play key roles. The
departments and OBM monitor financial and
operational performance on an ongoing basis via
monthly Expenditure Variance Reports, Revenue
Variance Reports, Management Information
Reports (MIRs), and Nothing but the FACTS
reviews (described below) to ensure
accountability for performance.

Reported performance data from the current year
are used to determine whether and how goals
should be modified for the upcoming fiscal year.
Changes are incorporated into the goal-setting
process, and the entire cycle begins again.

PROGRAM EVALUATION AND
PERFORMANCE MEASUREMENTS
COMPLETE THE CYCLE BY CHANGING THE
WAY GOVERNMENT WORKS

There is a common recognition among City
departments that we should always seek to
improve service delivery. The performance
evaluation process, beyond informing resource
allocation, contributes to improving service
delivery in several ways:

e The program evaluation effort, officially known
as Nothing but the FACTS, is an objective, open
and independent analysis of the performance of
a City organization, program, activity or
function. The FACTS program informs
management discussions and fosters inter-
departmental communications by providing
accurate information, unbiased analysis, and
objective recommendations. The City
recognizes that while a lot can be done within
single departments, much more can be

a1 de reeset Ol 0 Madenecne

Ghonaeles

accomplished through cross-department
integration of effort.

e Department performance measures help focus
departmental efforts on achieving priority goals
and objectives.

Program Evaluation

The FACTS program goal is to contribute to the
Administration’s efforts to create a City
government that works better, costs less, and gets
results. By providing reliable information,
unbiased analysis, and objective recommendations
year round to inform budget development, it
contributes to the better coordination of
crosscutting City programs and continual
improvement of service delivery.

The Nothing but the FACTS work is performed by
OBM’s staff. OBM conducts program evaluations
and other special studies at the direction of the
Mayor and the Cabinet. Teams of two or three
staff members are established to review specific
objectives. OBM provides oversight of department
operations by assisting managers in reviewing
existing activities and services in order to answer
the following basic questions:

What services are being provided?

e (Can these services be provided more efficiently?

e Are there different services or service
configurations that would reach more people,
more effectively?

e Are there programs or services that have

outlived their usefulness and should be

eliminated?

The OBM teams study the effectiveness of
operations and identify findings and
recommendations concerning the performance,
management and operation of programs and
functions for which funds are appropriated and
approved. The analysis is shared with the
departments for their review and comment.

Department Performance Measures

OBM works with departments in developing,
monitoring and using performance measures.
Performance measurement serves a number of
external as well as internal departmental
purposes. Performance measures are developed as
part of the planning process and flow from the
mission, goals, and objectives with an emphasis on

Budget and

Prerint Gate nat ii Gee

serving the department’s customers. Funding
decisions are clearly influenced by departmental
projected and actual performance. For example,
the Auditing Department was able to combine a
new business practice with the rollout.of new
technology to improve the payroll process. The
City’s practice of measuring performance
outcomes allows the City to track the reduction in
workload in terms of both the number of
scheduled pay periods and the number of checks
distributed. Resources previously necessary in
several departments, such as Treasury
Department, Management Information Services
Department and the Boston Public Schools, to
satisfy payroll services are being re-allocated to
accomplish other departmental priorities. Also
the City estimated cost savings from the reduced
check processing costs is approximately $500,000.

Departments identify the mission, goals and
objectives they wish to accomplish and the
measures with which they will track their success.
The measures used are intended to help focus
department efforts on achieving priority goals and
objectives. Departments project their annual
performance for key and non-key measures in
operating budgets. Departments, with OBM
support, measure and monitor their performance
monthly. Performance measures are used by
decision-makers in allocating resources and
determining annual appropriation levels.

The performance information drives decision-
making and focuses the appropriation process on
outcomes. The emphasis is on what City
departments accomplish instead of just what they
do.

Improving Service Delivery

The City is proud of its contributions to improving
government services. The FACTS program and
performance measures have increased
communication among departments, brought
experts in various departments together and
provided reliable information to change the way
we do business. The FACTS program process, in
concert with performance measurement, has
harnessed the departments’ expertise and
information to take a critical look at operations.

Evaluation findings and recommendations result
in or contribute to performance improvements in a
wide variety of government operations and
services. Many findings and recommendations, as

Goals 105

well as other information from OBM, lead to direct

financial benefits that impact the bottom line in

government budgets and expenditures. Examples

of contributions to improving City government.

performance include:

OBM established the Nothing but the FACTS
program to evaluate City organizations,
operations, and service delivery. Staff was
trained to serve as inter-departmental
evaluators by participating in sessions on
program evaluation, interviewing, and the
fundamentals of evidence and documentation.
The curriculum included internal training as
well as training by federal and state agencies.
Boston’s After School for All Partnership is a
new way of doing business based on cooperation
and collaboration among a diverse group from
the education, nonprofit, and business sectors.
As a result of studies and recommendations to
improve children’s educational opportunities
across Boston, the City is leveraging resources
to create an unprecedented level of support for
high quality after-school activities. The aim of
the initiative is to provide Boston children with
access to high-quality, affordable, safe, and
engaging after-school opportunities that
enhance their learning and overall
development.

City departments are working together to think
strategically about energy management.
Drawing on analysis done by various
departments the City is focusing its efforts
related to energy issues. This year the Mayor
will create a City Hall Working Group and an
Energy Think Tank. The working group,
composed of key players in City departments,
will work in conjunction with an Energy Think
Tank. The Energy Think Tank will create a
partnership among industry officials,
academics, and local government officials. The
issues tackled will range from ensuring a high
level of service, obtaining affordable,
competitive pricing, monitoring consumption,
reducing demand and facing the challenges of
conservation. The improvement in
management will be measured in terms of
improved service and dollars saved.

Another example of the use of performance
measures to allocate resources is in the
Administration’s goal of fostering safe

neighborhoods. To contribute to this citywide
goal the Boston Public Health Commission,
working with the Boston Police Department and
Boston Transportation Department, focused on
improving safety in neighborhoods by expanding
the “Walk this Way’ campaign to reduce the
number of pedestrians struck by vehicles. The
City has made progress in meeting its goal of
reducing the number of pedestrians injured and
needing transport to the hospital by Boston
Emergency Medical Services by 10 percent over
three years. The Public Health Commission is
tracking and reporting the data and based on
the outcome will reallocate resources to achieve
the goal.

e The OBM risk management program continues
to strive to reduce disruption in the delivery of
City services due to accidental losses, whether
caused by a natural disaster, workplace injuries
or a sudden increase in cost. This year the
program will begin to link measures and
insurance premiums. Standards for effective
loss control programs will be established.
Departments will be measured against these
standards, and individual department insurance
premium calculations will be based on their
performance.

e The Recreation Programming team, working
with the Parks and Recreation Department,
Boston Community Centers and Boston Public
Schools, has started a phased process that will
change the way the City provides recreational
opportunities to Bostonians. A Recreational
Director has been hired to coordinate current
recreation programming and develop a road
map for the future.

e A review team has also identified issues
surrounding programming for events and
concerts. The Office of Special Events and
Tourism is working in cooperation with the
Parks and Recreation Department to streamline
the summer concert series. Planning,
programming and equipment will be leveraged
to improve the summer concert series.

Service Areas For Future Studies

Many of the City’s departments find themselves
encumbered with structures and systems aimed at
the demands of earlier times. In some instances,
services as diverse as recreation, collection and
disposal of waste and permitting for public use of

Budget. and’ Part o:r mance boas

City facilities, are provided through overlapping
efforts in various City departments and programs.
On-going studies being conducted this year
include looking critically at towing operations,
customer service in the Office of the Parking
Clerk, the implementation of boat excise, after-
school programming and the delivery of
recreational services.

During the budget process, Mayor Menino
scrutinized how City resources could be better
applied to improve services. The Mayor
recommends the examination of several inter-
agency and other working relationships in order to
determine organizational alternatives that will
improve outcomes and better serve the citizens of
Boston. Service areas discussed for further study
include:

Street lighting,
e Energy management,
e Permitting and
e Facility management.

Bal dequG temdin diet Catat One Mm) din. cre

Goals

107

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Financial Management of the City

Managing the City’s finances involves both a
strategic and operational component.
Strategically, the finances must be managed to
accommodate fluctuations in the economy and
resultant changes in revenues. Operationally, the
City must put in place clear financial goals,
policies, and tools to implement the strategic
direction.

Over the previous fifteen years, the City’s
management of its finances has resulted in an
upward trend in general fund equity. This trend
was interrupted by only two events: the dramatic
state aid reductions in FY91 and FY92; and, the
merger of the city’s two public hospitals with a
private hospital to form a new private entity in
1996. It is expected that the latter event improved
the City’s future financial outlook by shielding the
City from the likely growth in hospital subsidies
that would have been required without the
merger. (Figure 1.)

Millions

$250

#200

91 "92 '93 ’94 '95 ’96 ’97 '98 ’99 ’00

General Fund Equity (GAAP Basis)
FY91-FY0O

Figure 1

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The City’s general fund is the only fund for which a
budget is legally adopted. Most of the City’s
general fund budget is raised and appropriated
from the tax levy, which means it is supported by
the revenues that are estimated to come in during
the course of the fiscal year. A detailed discussion
of these general fund revenues can be found in the
Summary Budget chapter. The FY02 Operating
Budget does not assume any appropriation from
the fund balance of the general fund. It is
expected that the results from FY01 will continue
the upward trend in general fund equity that the
City has experienced since FY97 (Figure 1). Since
the FY02 Operating Budget is soundly balanced,
the impact on general fund equity for FY02 is
expected to be zero. The City’s FY01 financial
statements are expected to be available in
November 2001.

The City’s general fund budget is also supported by
some available funds. The three available funds
that the City budgets each year are parking meter
revenues to support the Transportation
Department, cemetery trust monies to support the
City’s maintenance of its public cemeteries, and
surplus property disposition proceeds to fund a
risk retention reserve, which is discussed later in
this chapter. Additional discussion about these
revenue sources used to support the general fund
operating budget can be found in Summary
Budget.

Figure 2 provides a history, as well as projected
changes in fund balances, for the available funds
used to support the City’s general fund budget.

Management 1oO9

GENERAL FUND

Comparative Statement of Revenues, Expenditures and Changes in Fund Balance

Years Ended June 30, 2000 and 1999
(GAAP Basis of Accounting)
(in thousands)

REVENUES:

Local:

Real and personal property taxes, net. ..2...0.5.c01<.-<20:. ceteerseevese nes $

Excises....

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Intergovernmental:
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EXPENDITURES:

Current:

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Parks and

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Debt service

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OTHER FINANCING SOURCES (USES):
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Transfers to component unit

Transfers

Total other financing uses

Excess

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Fund balance, beginning of year

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2000

869,295
68,656
56,423
57,709
L925)
28,892
45,490

1,145,720

475,813
475,813
13625533

G5.1S2
4,916
358,855
69,689
oa
13,700
PLS igh Ps
578,583
5,861
6,911
86,221
96,019
66,995
5,868
114,486
1,536,258
85,275

1,636
(2,683)

(58,213)
18,026

(41,234)

44,041
176,659

220,700

Financial Management

1999

792,569
68,238
63,022
47,693
17,884
24,010
56,415

1,069,831

456,958
456,958
1,526,789

54,283
4,969
353,118
70,019
31,805
13,216
27,441
33/002
7,362
7585
84,493
83,341
65,569
7,081
111,683
1,459,550
67,239

DE
(54,340)
18,525
(33.424)

33,815
142,844

176,659

Parking Meter Fund
Beginning Ending

Fiscal Year Funds Funds Year
Year Balance Out In Balance

FY95 4.746 (3.500) 9.515 10.761
FY96 10.761 (7.000) 8.141 11.902
Ey9? * 11,902 (8.500) 8.558 11.960
FY98 11.960 (8.500) 7 O%3) 13.133
FYS9 °° 13.133 (1.500) 7.736 19.369
FYOO 19.369 (5.031) 7.704 22.043
*FYO1 22.043 (10.000) 7.800 19.843
"FYO2 19.843 (10.000) 7.500 17.343

Notes: ($millions), *projected

Cemetery Trust Fund
Beginning Ending

Fiscal Year Funds Funds Year
Year Balance Out In** Balance

FY95 5.936 (0.600) 1.184 6.519
FY96 6.519 (0.500) 2.304 8.324
FY97 8.324 = (0.700) _~—s 2.701'—«- 10.325
FY98 10.325 (0.700) 2.119 11.744
FY99 11.744 (1.589) 2.008 12.163
FYOO 12.163 (1.636) 3.179 13.706
*FY01 13.706 (1.678) 2.566 14.593
*FY02 14.593 (1.778) 2.181 14.996

Notes: ($millions), *projected, **Includes appreciation

Surplus Property Disposition Fund

. Beginning Ending
Fiscal Year Funds Funds Year
Year Balance Out In Balance

By domes O44 0.000 0.194 32.565
FY96 ~— 32.565 0.000 1.297 33.862
FY9/ 33.862 0.000 0.047 33.909
FY98 33.909 0.000 0.000 33.909
FY99 33.909 0.000 0.000 33.909
FYOO . 33.909 0.000 0.191 34.100
*FY01 34.100 (14.000) 0.000 20.100
*FYO02 20.100 (14.876) 14.000 19.224

Notes: ($millions), *projected

Figure 2

Finan cial) Miran ag 6 ment

Auditing and Budgeting Practices

The City prepares its comprehensive financial
reports in accordance with generally accepted
accounting principles (GAAP). However,
accounting practices established by the

Commonwealth’s Department of Revenue, the so-

called budgetary basis method of accounting, are
used in the annual budget and property tax
certification process. Budgetary basis departs
from GAAP in the following ways:

(a) Real estate and personal property taxes are
recorded as revenue when levied (budgetary), as
opposed to when susceptible to accrual (GAAP).

(b) Encumbrances and continuing appropriations

are recorded as the equivalent of expenditures
(budgetary), as opposed to a reservation of fund
balance (GAAP).

Other
Financing
Sources
Revenue Expenditures (Uses), Net
As reported on a budgetary basis 1,623,857 1,615,656
Adjustments:
Revenues to modified accrual basis 42.638
Expenditures, encumbrances and accruals, net 4,115
Reclassifications:
Parking meter revenue and expenditures to a special revenue fund (5,030) (5,030)
Debt service expenditures 455 18,481 18,026
State-funded teachers' retirement costs (88,751) (38,751)
Trust fund revenue (1,636) 1,636
Capital lease funds to capital projects fund (2,683)
Public Health Commission appropriation (58,213) (58,213)
As reported on a GAAP basis 1,621,533 1,536,258 (41,234)

Tele 2

(c) Certain activities and transactions are
presented in separate funds (GAAP), rather than
as components of the general fund (budgetary).

(d) Amounts raised for the prior years’ deficits
and available funds from prior years’ surpluses are
recorded as revenue items (budgetary), but have
no effect on GAAP revenues.

In addition, there are certain differences in
classifications between revenues, expenditures
and transfers. The following reconciliation
summarizes the differences between budgetary
and GAAP basis accounting principles for the year
ended June 30, 2000.

Adjustments Between Budgetary Basis and
GAAP Basis of Accounting for FY00

(in thousands)

Financial Management

Excess
(Deficiency) of
Revenue and

Other Financing

Sources

8,201

42,638
(4,115)

(2,683)

44 041

STRATEGIC FINANCIAL MANAGEMENT
Maintaining a healthy financial base that fully
supports City services according to mayoral
priorities requires constant vigilance. This work is
reflected in balanced budgets, restructuring and
reshaping City services, new financial
management systems, efforts to secure sound
recurring revenues, and responsible spending
adjustments in light of revenue growth limitations.
Inevitable fluctuations in the economic cycle
mean that Boston must expect and be prepared to
affirmatively tackle the financial challenges
ahead.

Deciding to build the City’s new convention center
also called upon the financial management skills
of City officials. Sharing a significant portion of
the cost of the project with the state will be
accomplished without impairing the future
delivery of city services. The City also absorbed a
large increase in its pension liability due to a
switch from the state to the city for funding the
cost of living allowances given during FY99 and
beyond. This increased liability was built into the
City’s pension funding schedule without impairing
the delivery of the current level of city services,
and also without sacrificing the conservative
pension funding assumptions that the City has
maintained since the early 1990s.

The City’s revenue growth has been strong since
FY94. Consequently, Boston has been and
continues to be in a solid position to maintain its
current level of services. Due to shifts that can
quickly occur, whether in state policy or in the
regional economy, the City remains alert to
potential reversals in its fiscal prospects.

Below are descriptions of some of the financial
management tools the City has utilized to achieve
positive results.

Strategic Economic Development

At the core of city government finances is a
healthy Boston economy for all citizens. A critical
area for economic development in Boston is the
building of a new convention center. With the
leadership of the Mayor, Governor, and legislative
leaders, the Boston Convention and Exhibition
Center is on schedule for substantial completion
in Spring 2004. Using $157.8 million in loan
authorization by the City Council, the City has

Falltied sec ska a

completed site acquisition and groundbreaking
occurred last spring. The loan will be supported
by hotel excise revenue from new hotels and from
other new revenue sources. The Commonwealth
will be covering the cost of construction.

Additionally, as interest in commercial
development in Boston continues, the Mayor has
put everyone on notice that all decisions on when,
where and what to build will be made with the
interest of the City as a whole in mind.

Maximizing Return on Investment

Through various channels, the City’s
administration works to maximize the service
delivery provided per dollar of revenue. In 1993,
city government was reorganized into a cabinet
structure that forces accountability. Today, work
continues to constantly reassess the management
organization and distribution of finances toward
priority goals that maximize return on investment.
The Office of Budget Management (OBM)
continues to inform management of financial
decisions through service-based budgeting and
objective assessments of cost efficiencies and
service delivery in certain areas.

Ongoing investment in the city’s resources —
people, property and systems—is key to
guaranteeing solid service delivery for the future.
Capital investments are made as part of the
annual city budget, weighing changing service
needs with the need for adequate building
maintenance and upgrading. Human resource
training has included specialized management
training and a new performance appraisal system.
The City’s technology needs are continually
assessed and updated on an ongoing basis. The
City has recently implemented its first enterprise
wide management information system.

Diversify the City’s Revenue Stream

Eighty percent of total general fund revenue
comes from just two sources, the property tax and
state aid from the Commonwealth. Both of these
revenues are strictly controlled by state law and
state legislative action. Therefore, the City
remains alert to the possibility of diversifying its
revenues. For example, in order to support the
funding for the convention center, the City did not
draw upon the current revenue base. Instead, new
City revenue sources were established and
earmarked for convention center funding. Among
the city and state funding sources is an increase in

Management als:

the hotel excise tax in Boston and Cambridge, the
full hotel excise tax for new hotels, the earmarking
of certain state taxes in a convention center
district, a car and truck rental fee, and the sale of
additional taxi medallions. These revenue sources
are targeted at those who will use the convention
center or businesses that will profit from
convention center activity, rather than burdening
city residents. In spite of the increase, the hotel
tax rate remains competitive with other major U.S.
Cities.

Protect the City from Sudden, Unexpected
Catastrophic Losses

Risk management efforts work to protect the City
from sudden adverse asset losses, whether caused
by a natural disaster, workplace injuries, a drop in
revenues or sudden cost increases. Risk
prevention efforts take place in all departments,
for example: MIS maintains back-up tapes for
computerized data; the City’s Risk Management
program addresses safety issues for employees and
property; the City’s Municipal Police implement a
citywide security system; operating departments
diversify vendors and implement long-term
contracts. Although any asset loss has a financial
impact, specific efforts to protect city finances
include diversifying the City’s revenue sources,
maintaining a conservative debt ratio and a risk
reserve, and prudent purchase of insurance. Risk
prevention and financing efforts are further
described later in this chapter.

Achieve a More Rational Separation of
State and Municipal Obligations

Local policy judgments, rather than state
mandates, must drive financial decisions. The
City’s greater than average share of county
corrections costs, and the cost of state mandated
charter schools are two clear examples of
vulnerability to state mandates that do not
necessarily reflect local priorities or ability to pay.
The City has fought for and received a reduced
share of county correction costs in the past but a
substantial inequity still remains. In FY99, the
state recognized the cost impact of charter schools
on hosting municipalities by partially reimbursing
hosting communities for the cost of charter
schools.

In recent years, the state itself has pursued a more
rational separation of state and municipal

obligations. The state recently withdrew from any
obligation for future funding of cost-of-living
adjustments for local government retirees.
Meanwhile, it has continued to increase its
support for local public education in which it
bears responsibility for equalized and adequate
public education.

These 5 items; strategic economic development,
maximizing return on investment, a more
diversified revenue base, protection against
catastrophic costs, and rational separation of city
and state obligations are prerequisites to the City’s
future financial health.

RESPONSIBLE OFFICIALS AND AGENCIES
The Mayor ultimately directs all of Boston’s
financial operations. The Mayor is the chief
executive officer of the City and has general
supervision of and control over the boards,
commissions, officers, and departments of the
City.

The City’s Chief Operating Officer directs
administrative services and labor relations.

City budget appropriations for all departments and
operations of the City and Suffolk County, except
the School Department and the county courts, are
prepared by the Office of Budget Management,
under the direction of the Chief Financial Officer.

The following six departments, which are included
in the Chief Financial Officer’s Cabinet, have
major roles in the City’s financial structure.

The Treasury Department collects revenues due to
the City and Suffolk County, and pays all amounts
due for payrolls and to outside vendors. The Chief
Financial Officer serves as the City’s Collector-
Treasurer. The Treasury Department also
manages the investment of City funds, and
supervises borrowings by the City in the form of
either short-term or long-term debt.

The Auditing Department maintains internal
controls, manages grant funds, provides financial
reports, maintains the financial records for the
City and County, and approves all payments made
by the City and County. The City Auditor is an ex-
officio member of the State-Boston Retirement
Board.

The Assessing Department, managed by the
Commissioner of Assessing, supervises the

Financial Management

valuation, for tax levy purposes, of all real and
personal property located in the City.

The Office of Budget Management, in addition to
overseeing the operating budget, also prepares and
monitors the City’s capital plan and coordinates
the long-range capital planning activities of City
and School departments.

The Purchasing Department procures all supplies,
materials, and equipment for City and County
departments.

The Retirement Board oversees the City’s
retirement system.

Three decision-making bodies also fill prominent
roles in the City’s budget process. The legislative
body of the City is the City Council, which consists
of 13 members serving two year terms. Four are
elected at-large and nine are elected from
geographic districts. The City Council may enact
ordinances and adopt orders, which the Mayor may
either approve or veto. Only the Mayor can
originate appropriation orders. Except for orders
borrowing or appropriating money and for local
adoption of a state statute involving the
expenditure of money, the City Council may
override a mayoral veto by a two-thirds vote. The
City Council may reject or reduce a budget or
budget item submitted to it by the Mayor, but may
not increase it.

The City’s public schools are under the control of
the School Committee, which is appointed by the
Mayor. The mayoral appointed governance
structure was reaffirmed in a 1996 referendum by
a 70% to 30% margin. The School Department
operating budget is submitted to the Mayor and
the City Council and is subject to their approval as
part of a budget process parallel to, but separate
from, the City and County.

Until FY91, the School Department regularly
incurred operating deficits. Chapter 613 of 1987
placed stricter controls on the School
Department’s appropriation process, in an attempt
to limit the potential for overspending, and
strengthened the powers of the Superintendent
vis-a-vis the School Committee. The Department,
however, continued to deficit-spend. As a result,
the City needed to ensure that other City spending
remained below available revenues in order to
offset the School Department deficits. These
annual School Department deficits continued

Fiumnanc ial

through FY90, ending only with the creation of an
appointed School Committee accountable to the
Mayor.

The Boston Public Health Commission is governed
by a seven-member board with six of the members
appointed by the Mayor, subject to City Council
confirmation. It is responsible for the
implementation of public health programs in the
City and provides financial support for various
health services. The Boston Public Health
Commission must submit a revenue and
expenditure budget to the Mayor. If and when the
Mayor accepts the budget (essentially the
deficiency between the revenues and
expenditures), then it is submitted with the rest of
the City and County budget to City Council.

INTERNAL MANAGEMENT CONTROLS

The City has established a system of internal
management controls. These controls are designed
to maximize revenue collections, manage
operating and capital spending, evaluate
infrastructure needs, and formalize the City’s
internal procedures. Major components of the
City’s system of financial management controls are
discussed in the following paragraphs.

Capital Planning

The Office of Budget Management’s Capital
Budgeting Program (CBP) is responsible for
managing the capital budget of the City. It has
overseen the significant increase in the level of
infrastructure investment, resulting in the
protection and preservation of the City’s capital
assets and the creation of jobs in the construction
sector. CBP’s mission is to evaluate the condition
of the City’s capital stock, forecast the timing and
financial requirements of new construction and
rehabilitation, and recommend allocation of
current and future resources to meet the City’s
infrastructure and capital requirements. Resource
availability and capital needs are assessed
frequently and appropriate planning responses are
taken. For example, there has been a greater need
for construction and renovation of schools due to
expanding enrollment, educational initiatives and
accreditation needs, and this has been done with a
focus on maximizing the reimbursement from the
state’s school building reimbursement program.

CBP evaluates and refines the relationship
between the City’s capital needs and resources as
the City moves through each fiscal year. This

Management 115

process is documented by an annually updated
five-year capital plan. Since FY99, the proposed
capital plan has been integrated with the
operating budget. The FY02-06 Capital Plan
reflects the administration’s commitment to
comprehensive planning and investment by
spotlighting projects ranging from future economic
development projects to strategies for
neighborhood revitalization.

In addition to its planning functions, CBP also
plays an ongoing project oversight and supervisory
role during the implementation phase of its capital
projects. CBP reviews and approves all capital
contracts and monitors project costs and
schedules to ensure the adequacy of available
funding sources.

Program-Based Budgeting and
Assessments

Since FY88, the City of Boston has used a program-
based budgeting system to track expenditures and
service levels by major functions or programs.

This budgeting system complies with the
standards of the Government Finance Officers
Association, which has consistently recognized the
City’s efforts with its Distinguished Budget
Presentation Award.

The City has built on this base of budget and
performance information to design a system of
departmental accountability for service outcomes,
making sure services are delivered at the level
expected, with a focus on customer satisfaction
and service efficiency. The Office of Budget
Management (OBM) plays a central role in the
collection and analysis of performance data,
ensures proper documentation of results, and
assists departments in pursuing opportunities for
improvements. All financial commitments by
departments are first reviewed by OBM for
conformance with service priorities and funding
availability.

Debt Management

The Treasury Department manages all City
borrowings. The Treasury Department has

focused on the timing of borrowings to take
advantage of favorable market conditions and has
carefully managed the City’s cash flows to help
eliminate the need for short-term borrowings. The
Treasury Department has established a series of

1 aa

debt management guidelines. The guidelines set
forth the City’s management policies toward
rapidity of debt repayment, debt affordability, the
limitation on the level of variable rate debt the
City will employ, target savings for refundings, and
reporting to the financial community and the
rating agencies.

The City uses a comprehensive, interactive debt
capacity model to assist City debt management
administrators in evaluating the potential impact
of debt issues on cash flow, credit and statutory
debt capacity. Two mainstays of the City’s positive
debt service position have been the relative
stability of the annual debt cost and the rapid
retirement of debt. The City’s annual debt cost
has remained under 7% of total general fund
expenditures since FY88, and in any given year
during that period at least 40 percent of principal
outstanding has been scheduled to be retired in
five years, and 70 percent in ten years.

Other factors have contributed to this favorable
debt position in the recent past. First, the City
took maximum advantage of low interest rates and
issued four large refundings of the City’s general
obligation debt in February 1993, February 1994,
April 1998 and April 2001. Second, the City slowed
down the rate of capital expenditures in response
to reductions in local aid in FY90-92, without
making the fundamental error of abandoning
capital spending altogether and thereby allowing
the infrastructure to deteriorate. Third, in spite of
the early 1990s recession and two straight budgets
with reduced revenue, the City maintained its
improved bond rating and thus maintained the
City’s image in the capital markets. Fourth, the
City has managed its cash flow such that short-
term revenue anticipation notes have not been
needed. This has been possible mainly because of
the switchover from semi-annual to quarterly
billing for property tax and from semi-annual to
quarterly distribution of state local aid. The
overall success in the City’s debt management
contributed to bond rating upgrades in 1995 and
1996, and, most recently, in February 2001 the city
was awarded ratings of Aa2, AA- and AA- from
Moody’s Investors Service, Standard and Poor’s
and Fitch IBCA, Inc., respectively. The City also
utilizes lease-purchase financing of equipment
with a two to seven year useful life. Annual lease-
purchase financing has totaled $7 to $10 million

Financial Management

for vehicles, computers, and lighter equipment.
Lease-purchase financing will be $13.8 million in
FY02.

Pension Management

As required by law, the State-Boston Retirement
System (SBRS), of which the City is the largest
member, performs a full valuation at least once
every three years. The system uses the valuation
to determine the total system liability and the
annual funding requirement. The SBRS hires an
investment manager who oversees the various
fund managers of the SBRS pension assets.
Positive investment performance for the SBRS has
allowed for a steady upward trend in the
percentage of pension liability funded. In recent
years, the SBRS has averaged a rate of return on
investment of assets well in excess of its 8%
assumption. Over the years, the City has worked
with the SBRS to maintain a conservative and
responsible pension funding schedule. This has
included maintaining a conservative investment
rate of return assumption, and shortening the
funding schedule.

Risk Management

Across the City, risk management efforts are made
to prevent, minimize, and finance unexpected
losses to the City’s human, financial and physical
assets. The Office of Budget Management’s Risk
Management Program works to maximize the
effectiveness of this intradepartmental effort by
reviewing citywide risk costs and assisting risk
management efforts. More specifically, the
program assists departments in effective loss
prevention, and implements a citywide risk
financing strategy. In 2002, the program is
working to further promote effective loss contro]
by linking the calculation of departmental
insurance premiums to the effectiveness of each
department’s loss prevention efforts.

Following is further discussion of certain types of
losses and how they are managed:

e The total cost of employee illness and health
insurance exceeded $110 million in FY00. The
Office of Human Resources (OHR) manages
healthcare costs through competitive bidding,
diversification and annual negotiations of
benefits with five healthcare plans, and a self-
insured indemnity plan. The average per-
employee annual cost increase for the past eight
years has been contained at under 5% per year.

Ferintarnecelsats

e The Office of Human Resources and the Police
and Fire Departments manage citywide
employee injury costs, which total over $50
million per year. Prevention efforts are
coordinated by the Risk Management Program
in OBM. Specific efforts continue in the Fire
department to contain injury costs, which total
over 40% of the citywide total.

e The City’s low liability claims costs total
between $3 million and $7 million annually.
Managed by the City’s Law Department, legal
Claims are limited by MGL Chapter 258, which
caps the City’s liability for most claims.

e Unexpected losses to physical city property have
been minimal, with the exception of the 1998
flood at the McKim Library, and are managed by
individual loperating departments.

e Because the City’s risk financing program
stresses departmental accountability, typical
risk costs for injuries, legal claims and property
losses are funded by individual departments.
The City budget, in turn, is protected from a
large loss through a risk retention reserve which
reached a $4.7 million balance in 2001, and a
property insurance policy that caps property
losses at $10 million.

Property Tax Collections

The collection of property taxes has been
improved by enhanced tracking systems and more
thorough collection procedures and notifications.
This has resulted in an increased rate of
collection.

The City has implemented an aggressive
enforcement program that continues to reduce the
number of tax accounts that are delinquent, and to
discourage new delinquencies. The City achieved
a property tax collection rate of 97.8% of the FY00
gross levy as of June 30, 2000. The City’s
enforcement program includes the adoption of
stricter guidelines for handling delinquent taxes,
utilizing a variety of collection remedies
authorized by state statute and working closely
with the Commonwealth to refine the tax
collection system. For example, the City, following
requisite approval from the Massachusetts
Department of Revenue, was the first municipality
in the Commonwealth to amend tax bills to
include past due amounts. The City has
implemented an automated tax information hot
line that allows taxpayers to call from 7 a.m. to 10
p.m., seven days a week, for updated tax balances,

Management wh AP yy

duplicate tax bills or information on other tax
related questions. In addition, during FY99, the
City combined customer service for the valuation
and collection aspects of property taxes that are
traditionally administered separately by the City’s
Assessing and Treasury departments. These
changes, coupled with letter writing campaigns to
first-time delinquents, have resulted in a
significant reduction in the number of past due
accounts.

Expenditure Controls

In addition to the management systems described
above, the City operates under several statutory
financial control systems. Certain controls
established in the 1982 Funding Loan Act and its
1986 amendments set limits on flexibility in
financial administration. Under the 1982 Funding
Loan Act, for example, until April 15 of each year,
the Mayor is authorized to reallocate no more than
$3 million.

Several other financial controls were enacted by
state law and implemented during the 1980s. An
expenditure allotment system prevents
departmental overspending of personnel
appropriations. Additional state law provisions are
directed at the control of School Department
spending. These controls, teamed with
conservative and cautious estimates of annual
revenue, have aided the City in avoiding operatmg
budget deficits every year since FY85, and have
aided the School Department in avoiding
operating budget deficits every year since FY90.

Reserve Fund

As required by law since 1986, the City has been
maintaining a reserve fund equal to 2 1/2% of the
preceding year’s appropriations for all City and
County departments except the School
Department. The fund may be applied to
extraordinary and unforeseen expenditures after
June | in any fiscal year with the approval of the
Mayor and the City Council. To date, this
budgetary reserve has not been utilized. As of
June 30, 2000, the reserve fund had a balance of
$18.7 million. FY02 marks the first year since
FY95 the City will be required to show an increase
in this reserve to satisfy the statutorily obligated
funding level. The City expects to fulfill the
Tregor Reserve requirement to add $1.1 million to
the reserve before the close of FY01.

118

Accounting System

Financial management is supported through the
City’s new PeopleSoft System. This computerized
financial management and human resources
system is designed to track standard accounting
functions such as revenues, expenditures,
accounts payable, accounts receivable and general
ledger. In addition, the PeopleSoft system
performs the specialized functions of
encumbrance control, fund accounting and grants
management, as well as other accounting and
budgeting functions. The utilization of this system
has improved the financial monitoring and the
reporting of funds management. On-line access to
financial information allows department managers
to evaluate directly the financial performance of
their departments and specific programs within
their departments.

The Auditing Department has developed a fiscal
year closing process that limits and controls
departmental appropriation reserves through
encumbrances and closely monitors the amount of
prior year reserves carried forward, which
maximizes the City’s undesignated fund balance.
In addition, the process allows for the year-end
closing and accompanying financial statements to
be completed in an efficient and timely manner.
The Auditing Department monitors payment lag
times and citywide vendor payments. Both the
tracking and scheduling of vendor payments
ensures timely payments to vendors and enhances
cash management. Payments to major utilities
such as Boston Gas and Boston Edison are
monitored by a system that addresses disputes
efficiently, thereby ensuring application of credits
and the elimination of late charges.

Management Letters

Each year, following the completion of the
financial statements, the City’s independent
auditors deliver a management letter containing
comments and recommendations on internal
financial controls. The current management letter
indicated no material weaknesses in the City’s
management. Specific management
improvements have been recommended in the
management letters, and many of the controls that
the City has implemented originated from the
auditors’ recommendations. The auditors have

Financial Management

commented favorably in successive management
letters on the City’s progress in addressing the
auditors’ suggestions. Through its own efforts and,
when required, through appropriate legislation,
the City intends to continue to modify and improve
its internal financial controls with the advice of its
auditors.

Contracting Procedures

The Uniform Procurement Act, Massachusetts
General Laws Chapter 30B, enacted by the
Commonwealth in 1990 (the UPA), creates
uniform procedures for the contracting of services
and supplies by all municipalities in the
Commonwealth. The Auditing Department,
working with the City’s Law Department, has
developed and implemented internal processes to
conform City contracting procedures to the
requirements of the UPA and other statutes
specifying required contract procedures.

Financial Management

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Capital Planning

OVERVIEW OF CAPITAL PLANNING

Boston’s Five Year $1.5 billion Capital Plan is an
investment program for the City’s future. The
underlying framework for the plan emphasizes (1) the
strategic use of infrastructure to promote economic
development, neighborhood revitalization, quality
education, health care, and public safety, (2)
comprehensive planning to lay the foundation for future
growth, and (3) effective government management to
provide leadership and vision.

The Office of Budget Management (OBM) is
responsible for managing the City’s capital plan and
budget. OBM coordinates the evaluation of capital
requests, forecasts the timing and financial
requirements of new construction and rehabilitation
and recommends the allocation of current and future
resources by monitoring capital expenditures.

Capital Planning Process

Capital needs and resource availability are assessed
annually through a capital planning process that results
in a five-year capital plan. The first year of the
spending plan is considered the City’s capital budget
and expenditures against this budget are closely
monitored. To emphasize the balance between need
and resource availability, the budget document (in
Volumes II and III) includes both capital authorizations
and expenditure projections for each project.

Steps in the Process

The process begins with a capital improvement project
request period where all departments have an
opportunity to identify their facility, infrastructure and
planning needs in a systematic manner and to forward
their proposals to OBM for funding consideration. The
development of department project requests may
involve both internal assessments of current need as
well as a review of external constituent requests.

The departmental requests must be comprehensive and
meet threshold criteria established each year. Project
requests include cost estimates, descriptions of the
proposed scope of work, useful life statements and
project justifications related to the primary criteria

Gra per teadis Plann itneg

All capital improvement projects requesting funding
consideration this year had to meet at least one of the
following threshold criteria:

e Complies with the Americans with Disabilities Act
(ADA)

e Improves health and safety

e Supports economic development

Enhances general government effectiveness
e Mitigates an environmental hazard

Responds to a legal, legislative or administrative
mandate
e Preserves existing municipal facilities
The total cost of a proposed project must also consider
its long-term effect on the City’s operating budget.
Accordingly, project requests also include information
describing the proposed projects anticipated effect on
personnel, utilities, maintenance and supply costs as
well as expected changes in service demand or delivery
of departmental programs. As a practical matter, it is
assumed that certain types of projects such as energy
conservation/efficiency (i.e. heating system upgrades,
roof and window replacements) provide operating
savings and OBM has begun working with departments
to measure these savings.

Finally, federal tax law regulations included in the 1986
Federal Tax Reform Act require a review of the
submissions to determine the extent to which private
purposes or benefits exist for each project. This review
is necessary for Boston to maintain its tax-exempt
financing status.

New capital requests that are recommended for funding
are placed into a multi-year spending plan along with
projects previously authorized. The Mayor submits the
capital plan to the City Council each year. The City
Council, in turn, holds public hearings to consider
approving project authorizations. This year’s capital
plan identifies 588 new and continuing projects and
proposes $117.4 million in new project authorization.
(See Highlights)

229,

Financing the FY02-FY06 Capital Plan
Financing for the capital plan is derived from the
following sources:

General Obligation (G.0.) Bonds

General obligation bonds represent 68% of all project
funding. This year’s plan assumes $500 million of new
general obligation borrowings over the next five years to
support ongoing capital needs. In addition, the City
expects to issue approximately $122.1 million in FY04 to
retire bond anticipation notes that will finance the
construction of two new middle schools and a new K-8
school. The proposed G.O. financing plan does not
include debt the City plans to issue in FY03 to support
the Boston Convention and Exhibition Center (BCEC)
project (See Major Capital Projects - Boston

Convention and Exhibition Center).

Bond Anticipation Notes (BANs)

The financing plan for the three new schools is

designed to take advantage of the reimbursement of
funds from the State under the School Building
Assistance Program (SBA). Under SBA, the City expects
to receive approval for 90% reimbursement on approved
project costs for the three schools. To best match the

projected cash flow from SBA, the financing for these
schools will be structured as bond anticipation notes
(BANs) for the construction period with permanent
financing structured to mirror the reimbursement
payments from the State.

The City’s share of the Boston Convention and
Exhibition Center (BCEC) project which totals $157.8
million was financed by bond anticipation notes issued
in May 1999 and February 2000. The City expects to
retire all outstanding notes with the proceeds of
Convention Center Bonds to be issued during FY03. At
the City’s option, the Convention Center Bonds can be
issued either as general obligation or as special
obligation bonds. (See Major Capital Projects - Boston
Convention and Exhibition Center)

Highlights of the FY02-06
Capital Plan

Education

Orchard Gardens New K-8 School

Two New Middle Schools

New Roofs at 5 Schools and Masonry Repairs
at 20 Schools

Humphrey 0.R.C. Vocational Equipment

Public Safe
New South End Police Station

New Centralized Evidence Storage Facility
New Fire Equipment

Fire Station Repairs

New Fire Radio System

Basic Services

Pave the Way

New Play Equipment And Ballfield Renovations
1,000 New Street Trees

Centre Street Reconstruction

Uphams Corner Library Siting Study

Dartmouth Street Plaza

Human Services

Community Centers Administrative offices
relocate to Mission Hill

Strand Theatre Improvements

Blackstone Community Center Renovations
Vine Street Community Center Renovations
Paris Street Pool Update

Chief Operating Office/Chief Financial
Office

Boston Administrative Information Systems
(BAISP}

MIS computer network upgrades

City Fiber Optic Network

Economic Development
New Boston Convention Center

Municipal Harbor Plans
Aquarium/Central Wharf Water Transportation
Upgraded Lighting at City Hall

Public Health Commission
New Fire Alarm System
Homeless Shelter Renovations
South Block Fire Safety Upgrades

Environmental Services

Open Space Acquisition Fund

Traffic Signal and Safety Zone Improvements
Off Street Parking

Creal p itcaulee Pe leanne

State and Federal Funds

State and federal funds, as sources of capital financing,
are currently estimated at $249.8 million from state and
$119.8 million from federal programs. Specific financing
programs provide key resources for Boston’s Capital
Plan. Examples of these programs include:

School Building Assistance Program: This State
Department of Education program is an important
revenue source for school renovation and construction.
In July 2000, the State legislature repealed the former
school construction aid program and enacted Chapter
70B of the General Laws. The reimbursement rates
under Chapter 70B range from 50% to 90% the same as
the former law although the method of determining the
appropriate rate is different. Under most conditions
the City’s school construction projects will continue to
receive ninety percent reimbursement for the eligible
project costs. The reimbursement period generally
corresponds to the term of outstanding debt for each
school project. Reimbursement payments are made to
the City’s General Fund and are included as part of the
annual State Aid package. In FY02 reimbursement
payments are forecast at $18.8 million. Reimbursement
payments due between FY03-FY06 are forecast at $86.7
million.

Chapter 90 Funds: Administered by the Massachusetts
Highway Department, Chapter 90 funds are allocated by
formula through State bond authorizations and through
the State budget to all cities and towns in the
Commonwealth. Based on current allocations, $7.26
million in Chapter 90 funds are anticipated annually.

Transportation Improvement Program (TIP): The TIP is a
statewide road and bridge construction advertisement
program developed under the management of the
Commonwealth of Massachusetts Executive Office of
Transportation and Construction (EOTC). It includes
both locally owned roads and bridges as well as state
owned roads and bridges. The TIP’s funding sources
include state issued general obligation bonds and
federal dollars, which are available through the $167
billion Transportation Equity Act for the 21st Century
(TEA-21). State departments including the
Massachusetts Highway Department (MHD), the
Massachusetts Bay Transportation Authority (MBTA)
and the Massachusetts Turnpike Authority (MTA) use
the TIP to manage the bidding and awarding of state
construction projects. The capital plan carries 37
projects that are eligible for inclusion on the TIP.

Massachusetts Water Pollution Abatement Trust
(MWPAT): A statewide revolving fund that commenced

Granpeltedtieers arnenalieneg

operations in 1990 to address necessary environmental
actions outlined in the Federal Clean Water Act. $13.4
million was included in an October 1999 MWPAT bond
issue to cap the former Gardner Street landfill as a non-
point source of water pollution and to create
Millennium Park. Boston will repay the MWPAT for
these essentially zero interest bond funds over twenty
years.

Trust Funds

The City’s Trust Office manages trust funds and
bequests from private citizens that are dedicated to
Boston’s public spaces. While these trust funds
represent a small percentage, less than 1% of the
overall revenue to the capital plan, they play an
important role. Grants from the Edward Ingersoll
Browne Trust Fund have been used for the restoration
of neighborhood parks, schoolyards and public spaces.
The George Robert White Fund is used to support
facilities owned by the Fund.

Expenditures

Capital expenditures totaled $157.5 million in FY00
excluding the Convention Center. (See Figure 1) The
continuing emphasis on school technology and the
renovation/expansion of several high schools increased
the School Department’s share of capital expenditures
in FY00 to approximately 45% of total expenditures. In
addition, construction began on a new library in Allston
and a new police station in the South End. Finally, the
Parks and Recreation Department continued its
ongoing program of renovating parks, replacing play
equipment and planting street tree.

Capital expenditures totaled $151 million in FY01
excluding the Convention Center. The investment in
school technology continued, site demolition and
remediation began for two new schools, and renovation
work continued at Boston Latin School. The School
Department’s share of capital expenditures was
approximately 38% from all sources of funds. The Fire
Department began a project to replace and upgrade its
radio system. During FY01, equipment upgrades at
existing radio receiver sites and design on the next
phase was begun. The Public Works Department
continued the Pave the Way program. Pave the Way is
designed to resurface 91 miles of roads and reconstruct
40 miles of sidewalks. In addition, renovations to the
Tobin Community Center were largely completed,
construction on a new library in Allston and a new
police station in the South End were also substantially
completed.

Capital expenditures are forecast at $153 million in
FY02 excluding the Convention Center. Construction is
expected to begin on two new middle schools and one
new K-8 school. In addition, the School Department
will continue replacing outdated HVAC systems and
roofs, repointing masonry, and installing new windows.
The Fire Department will purchase new apparatus, and
will continue the radio system upgrade. Substantial

Millions
$200

$780

$160

Capital Expenditures
FY97 - FY06

Figure 1

work is scheduled to begin at Long Island and on the
Long Island Bridge. The Public Works Department will
continue the Pave the Way program while the Parks
Department oversees renovations and upgrades to over
one hundred parks, playgrounds, playing courts and ball

fields throughout the City.

Capital expenditures are estimated at $184 million in
FY03 with a gradual reduction to $120 million in FY06.
The FY08 total includes approximately $64 million for
the construction of three new schools. General
obligation bond spending on all other capital projects is
not expected to exceed $100 million annually during
the period FY03-FY06. State grants, trust funds and
other sources are expected to contribute approximately
$20 million annually to capital expenditures.

The expenditure trend shown in Figure 1 for the period
FY03-FY06 does not include expenditures that may be
incurred for the construction of two additional schools.
When feasible sites are identified for these schools, and
reliable cost estimates are developed and the State
indicates that the facilities are eligible for

124

reimbursement the capital plan will reflect their
projected costs.

The City continues to aggressively pursue grant funds,
maximize the use of Chapter 90 funds for road and
sidewalk projects, and actively manage its projects to
ensure that spending stays in line with projections and
that priority projects move forward. Together, these
strategies will enable the City to maintain a reasonable
level of capital spending, borrowing and prudently
manage its outstanding debt.

Operating Budget Impacts

The FY02 budget includes funding for several new City
assets including Millennium Park, a 100-acre park in
West Roxbury, a new branch library in Allston, and new
community centers in Mission Hill and Roxbury. OBM
worked closely with the Parks and Recreation
Department (PRD), the Boston Public Library (BPL)
and Boston Community Centers (BCC) to develop
credible operating plans that balance the need to
provide community services and programs with the
available fiscal resources. In the case of Millennium
Park OBM and PRD analyzed the incremental costs of
operating the park and identified several potential
opportunities for public-private partnerships. The BPL
and OBM have worked for the past six months getting
ready to open the new library in Allston. The
departments have coordinated the phased hiring of staff
and the purchase of collections material to ensure a
smooth operation on the day the library opens. BCC
will open new community centers in FY02. The
departments have coordinated the operating plans for
these facilities so that sufficient resources are
committed to staffing, community outreach and facility
operations. BCC will offset a portion of the increased
costs by consolidating their administrative offices into
one of the new centers, the Tobin Community Center,
from space that is currently leased in a privately owned
building.

Capital investments do not always result in increased
operating costs. Many capital investments instead
decrease operating expenses by reducing costs
associated with emergency repairs, ongoing
maintenance of old systems, and energy inefficiency. A
substantial portion of the City’s capital budget is
focused on basic facility repairs such as roof
replacements, new window installations, heating and
cooling system updates, refurbishing parks,
playgrounds, play lots, playing courts and ball fields.

Cratpiitteagl Relat nets

In FY02, the BPL will continue the implementation of a
citywide book security system at all the branch
libraries. This project will help decrease the loss of
library books thereby reducing the annual cost of
buying replacement books. The Public Works
Department’s Central Maintenance Facility will get a
new energy efficient heating and cooling system that
will pay for itself in just over four years due to reduced
energy consumption requirements. These capital
investments will create operating budget savings that
would otherwise be unavailable for other city services.

Debt Management Policies and Debt
Implications of the Plan

Effective debt management will ensure that the City
can meet its capital infrastructure and facility needs.
Debt management requires a series of decisions about
the amount, timing, purposes and structure of debt
issuance. The long-term debt related to capital
investment has two main purposes:

(1) it finances acquisition, construction, repair and
renovation of City-owned buildings and equipment that
are necessary to provide public services; and

(2) it finances infrastructure improvements needed for
the City’s continued growth and maintains safe roadway
conditions.

The Treasury Department manages all City borrowings.
It has focused in particular on the timing of borrowings,
paying special attention to favorable market conditions.
The City adopted a set of debt management policies
that were implemented by the Treasury Department.
These policies address issues such as debt affordability
and limitations on the level of variable rate debt the
City will use. The goal is to rapidly repay debt, maintain
a conservative level of outstanding debt and ensure the
City’s continued positive financial standing with the
bond market.

Key components of the debt management policies
ensure that:

e combined net direct debt does not exceed 3% of
taxable assessed value;

e at least 40% of the overall debt is repaid within five
years and 70% within ten years;

e annual gross debt service costs does not exceed 7% of
general fund expenditures;

e the variable rate debt does not exceed 20% of the
City’s total currently outstanding bonded debt.

Refer to the chapter on Financial Management for

further discussion of the City’s financial policies and

management controls.

Cmeip it ad Planning

The City’s debt service forecast assumes a general
obligation borrowing of $100 million per year for FY02-
FY06. The City issued bond anticipation notes (BANs)
on February 1, 2001 totaling $25 million to finance the
construction of three new schools. The City also
anticipates issuing $96 million of BANs during FY02 and
FY03 with plans to retire such notes during FY04 with
the proceeds of school bonds totaling $121 million. The
timing of the issuance and retirement of the notes will
be structured to maximize the benefits of the States’
School Building Assistance program. The debt tables at
the end of this chapter detail the City’s outstanding
debt service obligations and demonstrate the City’s
rapid retirement of its debt.

The City’s debt service requirement in FY02 is slightly
above the City’s operating guideline of 7% of total
operating budget expenses (Figure 2).

The City’s debt service requirements for FY03-06 will
also exceed the established operating guidelines with
debt service peaking as a percent of operating expenses
in FY05. The increase is attributable to the
commitment to funding new school construction. A
substantial portion of the additional debt service will be
offset by reimbursement payments from the State
through the School Building Assistance program. The
City will continue to actively manage its capital
spending program to reduce pressures on debt service.

The ratio of debt service to the City’s primary revenue
source, the property tax levy, declined

‘99 ‘00 ‘01 ‘02 ‘03 ‘04 05 ‘06
Gross Debt Service as a
Percent of Total General Fund
Expenditures
FY99 - FY06

Figure 2

significantly in the early 1990s. This ratio is projected to
increase modestly over the next five years. (Figure 3.)

Gross Debt Service as a

Percent of the Net Property Tax

Levy

FY99 - FY06 Figure 3

The City’s current overall debt burden (net direct debt
to assessed property value of $50.49 billion) is 1.24% as
of January 1, 2001. The City’s net direct debt per capita
currently stands at $1,126.09 as of January 1, 2001.

Boston has been conservative about assuming long-term
debt and aggressive about retiring debt expeditiously.
As of June 30, 2000, the City’s debt retirement schedule
shows that 44.9% of its principal will be retired five
years out, before the end of fiscal year 2005. (Figure 4).
This overall approach to debt issuance has significantly
shaped the City’s capital investment strategy. Upgrades
to the City’s bond rating have also recognized the
successful capital investment strategy. In February
2001, Moodys Investors Service, Standard and Poors and
Fitch IBCA, Inc. awarded the City with bond ratings of
Aa2, AA- and AA-, respectively.

Boston has had eleven general obligation bond sales
over the past decade, the most recent of which was for
$120 million in February 2001. The City also has had
five general obligation refunding issues, the most recent
was in April 2001, which achieved significant interest

rate savings.

Major Capital Projects

Table 1 lists the major projects being undertaken by the
Capital Plan. Descriptions on all 588 projects can be
found in Volumes II and III of the Adopted Budget. The
project descriptions include authorizations and funding
sources, projected expenditures and scope information.

Boston Convention and Exhibition Center

The Convention Center Act authorizes the development
of the Boston Convention and Exhibition Center
(BCEC) Project on a 60-acre site in South Boston
through the joint efforts of the City, the Commonwealth,
the Boston Redevelopment Authority (BRA) and the
Massachusetts Convention Center Authority (MCCA).
The facility will include over 500,000 square feet of
contiguous exhibition space, as well as ballrooms,
meeting rooms, banquet and lecture halls, and parking.
The BRA is authorized and directed by the Convention
Center Act to acquire the site for the BCEC Project and
to carry out all required site preparation, including
demolition and environmental remediation. The
completed site will be conveyed to the MCCA for
nominal consideration. The MCCA is responsible for the
design and construction of the BCEC, and its operation
upon completion.

Under the Convention Center Act, all costs of site
acquisition and preparation incurred by the BRA for the
BCEC Project have been borne by the City up to an
initial ceiling of $157.8 million. All such costs in excess
of $157.8 million and up to $205 million will be borne by
the Commonwealth. If the costs of site acquisition and
preparation exceed $205 million, the Convention Center
Act provides that the City and the Commonwealth will
share the excess equally up to a maximum of $50
million (i.e., an additional $25 million each). The
Convention Center Act authorizes the City to issue up to
$182.8 million of bonds (and notes in anticipation
thereof) to finance the BRA’s initial site acquisition and
preparation costs up to $157.8 million, plus an
additional $25 million, if necessary, to finance the City’s
share of those site acquisition and preparation costs
that exceed $205 million. All costs of design and
construction of the BCEC Project will be funded by the
Commonwealth through the issuance of up to $537.2
million of special obligation bonds of the state
authorized by the Convention Center Act.

In accordance with the requirements of the Convention
Center Act, on March 11, 1998, the City Council and the
Mayor approved the Loan Order authorizing the
issuance of up to $157.8 million in Convention Center
Bonds, and notes in anticipation thereof, to fund costs
of site acquisition and preparation. The costs for site
acquisition and preparation have exceeded $157.8
million. Should costs exceed $205 million, the current
earmarked revenues would provide sufficient coverage
for the modest increase to the City’s BCEC debt service.
The City initially funded its BCEC Project costs through

Ccaypiitteanl) Palbagneneung

issuance in May 1999 of $130 million in bond
anticipation notes. In February 2000, the City issued
another $27.8 million in bond anticipation notes for the
remainder of its portion of the expected BCEC Project
costs. The City plans to retire the bond anticipation
notes with bonds to be issued during FY03.

Convention Center Bonds issued by the City to retire
the bond anticipation notes or fund additional BCEC
Project site expenditures may be issued as general
obligations of the City or may be issued as special
obligation bonds secured by a pledge of all or a portion
of the City’s receipts from (i) the City’s receipts from
the 4% local option excise tax on the transfer of rooms
in any hotel, motel or other lodging establishment in
the City, (ii) the City’s $1 share of the Commonwealth’s
receipts from a $10 surcharge imposed on each
vehicular rental transaction in the City, and (iii) all
proceeds from the issuance and sale of the first 260 taxi
medallion licenses issued by the Commissioner of Police
after enactment of the Convention Center Act. The last
two supporting revenues were established as new City
revenue sources in the Convention Center Act.

The BRA provided direction, expertise and services with
respect to the drafting and approval process for the
environmental impact report for the project and a
marketability study required by the Convention Center
Act. Both the environmental impact report and the
marketability study were completed and accepted in
1998. Site acquisition was completed early in 2000. The
BRA has reached final settlement with owners on
approximately three-quarters of the acreage of the site.
For the unsettled parcels, owners have received pro
tanto payments that represent the BRA’s estimate of
fair market value and retain their right to litigate their
claims. The BRA procured a property manager for the
site and has nearly completed relocation of the tenants.
The BRA is also close to completion in site preparation
that includes demolition and environmental
remediation.

Work by the MCCA has commenced on the design and
construction of the BCEC Project. The MCCA has
engaged an owners representative, a designer, a
construction manager, and has begun qualifying
subcontractors. Groundbreaking for construction of the
BCEC Project took place in the spring of 2000. The
BCEC is expected to be substantially complete in
Spring 2004, with initial convention business beginning
several months thereafter.

Clanpel @anll SP ivanknn nig

Fenway Park Project

The Massachusetts legislature enacted the Fenway Park
Act (Chapter 208 of the Acts of 2000) in August 2000 to
support the development of a replacement facility for
Fenway Park, the home field of the Boston Red Sox.
Subsequent to its passage, a 53% controlling interest in
the Red Sox was offered for sale. The Red Sox
temporarily set aside the process of obtaining approvals
required by Chapter 208 until after completion of the
sale. The Fenway Park Act is site-specific. If and when
the sale is completed, should the new owner not opt for
the Chapter 208 plan for replacing Fenway Park, new
legislation would be required if a plan put forth by the
new owner requires any substantial form of public
participation.

The Fenway Park Act authorizes the Economic
Development and Industrial Corporation (EDIC) to
acquire a site for the new ballpark adjacent to the
existing Fenway Park, to relocate current owners and
tenants and to demolish the existing structures on the
site, to remediate any environmental and other hazards
and to otherwise prepare the site for construction of the
new ballpark and to lease the prepared site to the Red
Sox on terms and conditions that EDIC and the Red Sox
agree to, subject to the approval of the City’s Collector-
Treasurer. EDIC is further authorized by the Fenway
Park Act to acquire an additional site adjacent to the
new ballpark and to construct up to a 3,000 vehicle
parking garage and related facilities on that site to
support the new ballpark. Separately, the Fenway Park
Act includes an appropriation by the Commonwealth of
$100 million for street, mass transit, utility, landscape
and other infrastructure improvements outside of the
new ballpark.

Subject to authorization by the City Council and Mayor
as described below, the City is obligated by the Fenway
Park Act to reimburse EDIC for up to $140 million of
costs incurred by EDIC to acquire and prepare the
ballpark site, and the act authorizes the City to issue up
to $140 million of either general obligation bonds or
special obligation bonds for such purpose. All costs of
site acquisition and preparation in excess of $140
million, and all costs of construction of the new
ballpark, are solely the responsibility of the Red Sox. In
addition the City shall have no obligation to reimburse
EDIC for any costs of the site acquisition and
construction of the proposed parking garage. For so
long as any bonds of the City are outstanding under the
Fenway Park Act, the act provides that the Red Sox
shall pay rent to EDIC for its lease of the ballpark site
in an amount equal to the debt service on such bonds,

e257

but in no event more than $12.1 million annually, and
EDIC shall pay this rent to the City for deposit in the
ballpark site finance fund. The act further provides
that the City shall credit certain facility betterment
fees, administrative parking fees and sales and
occupancy excise tax receipts collected by the Red Sox
or paid directly to the City against the annual lease
payments to be paid by the Red Sox.

Neither EDIC nor the City is authorized to incur or
finance any cost of the ballpark site or the parking
garage project, and the Commonwealth is not
authorized to carry out any infrastructure
improvements, until, among other things, a
development plan for the projects shall have been
approved by the City Council and the Mayor, the City
Council and the Mayor shall have authorized the bonds
of the City required for the ballpark site project, the
City’s Collector-Treasurer and the state Secretary of
Administration and Finance shall have approved a
finance plan for the ballpark prepared by the Red Sox,
and the Red Sox shall have agreed to the terms of a
ground lease which has been approved by the Collector-
Treasurer. To date none of the preconditions to
commencing the project have been satisfied.

128 Gras palbteant

Poleatne ne ianea

Table 1
Major Capital Projects FY2002 - 2006 Plan

Convention Center Enhance Boston's tourism, trade and visitors industries through the acquisition of land 157,800,000
and site preparation for a new convention center containing approximately 600,000
square feet of contiguous exhibition space. Also includes pre-development costs.

Mildred Avenue New Middle School Design, construct and furnish a new middle school. The new facility will also include a 49,358,380
new community center.

Muddy River Stormwater Controls & Dredge Dredge and construct stormwater controls on the Muddy River. State construction 45,000,000
funding anticipated.

New Middle School at Columbia Road Design, construct and furnish a new middle school. 38,948,067

Boston Latin School Upgrade electrical system, expand data wiring and technology to all classrooms, 37,740,000
expand the library/media center, and update science labs. Construct an addition
containing a kitchen, a cafeteria, and music and art rooms.

Orchard Gardens K-8 Design, construct and furnish a new K-8 school. 32,725,000

Technology Upgrades FY98-01 Upgrades for technology, including upgraded electrical service and distribution; 31,910,719
installation of data wiring.

Gardner Street Landfill Phase | And I! Prepare closure plan for former landfill. Develop a reuse plan balancing environmental 20,200,000
preservation with open space and recreation needs of community. Implement plans to
phase in active and passive recreational uses.

Huntington Avenue Design reconstruction of roadway. State construction funding anticipated. 15,636,347

Pave The Way 2000 Roadway resurfacing and sidewalk repair program that will begin during the Summer 15,000,000
1999 resurfacing and repairing neighborhood streets and sidewalks throughout the City.

Fire Radio System Design and construct a new radio communication system including new receiver and 10,400,000
transmitter sites, fiber optic lines, and upgraded computer equipment at Fire Alarm.

New Area D-4 Station Design, acquisition and construction funds for a new neighborhood police station that 8,884,000
will replace an existing facility.

Allston Branch Library Programming, siting study, design and, construction of a new neighborhood branch 8,106,500
library.

Hyde Park Avenue Develop design and engineering plans to reconstruct the roadway, sidewalks and 7,689,492
lighting. Improvements to include landscaping.

Tobin Community Center Renovate building to accommodate new day care facility and administrative offices. 7,300,000
Replace air handling units in gym and install new lighting.

Vine Street Community Center Renovate entire building including major interior and exterior improvements. The project 6,924,400
also includes providing access for persons with disabilities.

Christopher Columbus Park Major park renovation to include site preparation, utilities, new pavements, and 3,500,000
substantial refurbishment of the lawn and plantings.

Joe Moakley Park Design and construct a new synthetic turf playing field and track in the stadium. 2,625,800
Renovate the softball diamond. Remove and replace outdated play equipment, curbing,
paving, landscaping and other site improvements at play lot near Preble Street.

Centre Street Design the reconstruction of Centre Street from Greaton Road to Spring Street in West 2,160,000

Roxbury. Construction will be implemented in two phases. Phase | will go from Spring
Street to Mt. Vernon.

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RATE of PRINCIPAL RETIREMENT:

(as of June 30, 2000)
Fiscal Years Ending June 30, 2001 - 2020
Percentage of
Total Principal

%
%
%
%

Fiscal Year Ended June 30, Amount Amount Retired:
2001 - 2005 348 893,711.00 44.89
2006 - 2010 220,625,546.00 28.38
2011 - 2015 147,765,000.00 19.01
2016 - 2020 59,985,000.00 Tele
777,269 ,257.00 100.00

Figure 4

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132

OUTSTANDING DEBT as of JUNE 30, 2000

Percent of
Total

6/30/00 Debt
General Purpose:
Acquisition of Land, Parks and Recreation/

Outdoor Facilities/Cemeteries/LandFill Areas 59 887,709.57 ek)

Departmental Equipment 22,.0UZU GOS OL 2:00

Computer Hardware/Software Sd Oiaa2ielo 4.27

Remodeling & Extraordinary Repairs 225 ile 201530 28.71

Engineering and Architectural Services 1,446,788.31 0.19
339,693,857.96 43.70 %

Urban Development:

Economic Development and Industrial Corporation 9,306,440.96 1720
Urban Redevelopment and Renewal 33:462-106,73 4.31
42,768,597.69 5.50 %

Parking Facilities:

Parking Facilities/General 78,483.31 0.01
78,483.31 0.01 %
Schools:
Capital Improvements, Act of 1966 25,995.50 0.00
Capital Improvements, Act of 1973 2,000,021 .20 0.34
Capital Improvements, Act of 1991 24,541,308.47 Seq ils
Capital Improvements, Act of 1996 27 648,231.02 3.56
School Project Loan, Act of 1948 67 444,699.51 8.68
1228916226175 15.74 %
Public Buildings:
Construction of Buildings 71,482,817.01 9.20
Capital Improvements, Act of 1966 103,571.93 0.01
Capital Improvements, Act of 1973 36,;733,100.75 4.73
Capital Improvements, Act of 1991 42,375,229.48 5.45
Capital Improvements, Act of 1996 30,309,782.90 3.90
181,004,502.07 Po Pa? Toy,
Public Works:
Construction of Bridges 1To.053 212 2.45
Construction of Public Ways 48,587,691.26 6.25
Construction of Sidewalks 9,878,020.76 lene
Traffic Signals, Public Lighting, Fire Alarms 13,888,624.44 1.79
91,407,554.18 14Ab760%

GRAND TOTAL = 777,269,256.96 100.00}%

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Planning

Grarpeivenanl

134

statutes and Ordinances
Governing Boston's Operating and Capital Budgets

This section summarizes key Commonwealth laws
and City ordinances affecting Boston’s operating
budget development and its subsequent
expenditure. The section also covers significant
laws and ordinances governing general obligation
loan authorization. Although the material is not
all-inclusive, please note that it covers the more
important laws guiding the budget process.

In addition to the statutes and ordinances, other
budget-related directives are in various mayoral
Executive Orders and in the policies and
administrative guidelines issued by the Office of
Budget Management.

For understanding Boston’s operating budget, the
most important pieces of legislation are Chapter
190 of the Acts of 1982, commonly referred to as
the Tregor legislation, and Chapter 701 of the Acts
of 1986, known as the Tregor Amendments.

Annual Appropriation Process

Section 15 of Chapter 190 of the Acts of 1982, as
amended by Section 2 of Chapter 701 of the Acts of
1986 states that “all appropriations, excepting
those for school purposes, to be met with taxes,
revenue or any source other than loans, shall
originate with the Mayor. The mayor, not later
than the second Wednesday in April of each year,
shall submit to the city council the annual budget
of the current expenses of the city and county for
the forthcoming fiscal year...

“The city council may reduce or reject any item
but, except upon the recommendation of the
mayor, shall not increase any item in, nor the total
of, a budget nor add any item thereto, nor shall it
originate a budget.

“Not later than the second Wednesday in June, the
city council shall take definite action on the
annual budget by adopting, reducing or rejecting
it, and in the event of their failure to do so, the
items and the appropriation orders in the budget
as recommended by the mayor shall be in effect as

Sitra teustee soa ne 'G

if formally adopted by the city council...

“The city council shall take definite action on any
supplementary appropriation order and any order
for a transfer of appropriations by adopting,
reducing or rejecting it within sixty days after it is
filed with the city clerk...

School Department Budget Process

Subsection 6 of Section 32 of Chapter 71 of the
Acts of 1998 states that “in addition to amounts
appropriated for long-term debt service, school
lunches, adult education, student transportation,
and tuition revenue, each municipality in the
commonwealth shall annually appropriate for the
support of public schools in the municipality and
in any region school district to which the
municipality belongs an amount equal to not less
than the sum of the minimum required local
contribution, federal impact aid, and all state
school aid and grants for education but not
including equity aid, for the fiscal year...the
commissioner (of the Department of Education)
shall estimate and report such amounts to each
municipality and region school district as early as
possible, but no later than March first for the
following fiscal year.”

Section 2 of Chapter 224 of the Acts of 1936, as
amended by Chapter 618 of the Acts of 1987
further states that “(a) in acting on appropriations
for educational costs, the city council shall vote on
the total amount of the appropriations requested
by the mayor, but neither the mayor nor the city
council shall allocate appropriations among
accounts or place any restriction on such
appropriations. The appropriation shall establish
the total support of the public schools, but may not
limit the authority of the school committee to
determine expenditures within the total
appropriation; provided, however, that if the city
auditor determines that school department
expenditures in any fiscal year are projected to be
in excess of total budgeted expenditures for that

Oud Vened Nn crers 1385

fiscal year, as supported by appropriation and
other available funding, then the school
committee shall not reallocate or transfer funds
from any item in the budget for that fiscal year to
fund any such projected additional expenditures.

“(b) After the fourth Wednesday of March of any
fiscal year, the school committee shall not initiate
or authorize any new or additional programs or
categories of expenditures requiring additional
unbudgeted expenditures unless such programs or
categories have been incorporated and fully
funded in the budget for the subsequent fiscal
year. If such programs or categories have not been
incorporated and fully funded in the budget for the
subsequent fiscal year, they shall not be initiated
or authorized until the school committee shall
have amended its budget submission for the
subsequent fiscal year to reduce or eliminate other
costs, programs or categories in amounts equal to
the projected annualized costs of the new or
additional programs or categories of expenditures.

“(c) The superintendent of schools shall prepare
and submit to the school committee, the city
auditor and the city office of budget management,
a monthly budget update report which shall detail
and itemize year-to-date and projected school
department expenditures and budget transfers.”

School Department Financial Affairs

Section 1B of Chapter 231 of the Acts of 1906, as
amended by Chapter 613 of the Acts of 1987 notes
that “the school committee may delegate, in whole
or in part, to the superintendent of schools the
authority to approve for the school department the
acceptance and expenditure of grants or gifts of
funds from the federal government, charitable
foundations, private corporations, individuals, or
from the commonwealth, its counties,
municipalities or an agency thereof, the provisions
of section fifty-three A of chapter forty-four of the
General Laws notwithstanding.

“(b) The superintendent of schools shall provide
to the school committee, the city auditor and the
office of budget management of the City of Boston
a report, detailing the source, purpose and balance
on hand of all funds received or expended
pursuant to subsection (a), quarterly.”

Section 2 of Chapter 231 of the Acts of 1906, as
amended by Chapter 613 of the Acts of 1987 states

that “subject to appropriations therefor, the
superintendent of schools shall have the exclusive
authority to make on behalf of the school
committee contracts, or amendments to contracts,
for the purchase or rental of equipment, materials,
goods or supplies, leases of property, alterations
and repairs of school property, and for professional
or other services, with the exception of collective
bargaining agreements and contracts for the
transportation of students. All school department
contracts or amendments to contracts shall
otherwise conform to the requirements of the city
charter of the city of Boston.

“(b) With respect to all contracts, agreements or
amendments thereto made or entered into by the
school department, the superintendent shall be
responsible for establishing procedures for
auditing and monitoring the compliance of the
parties with the terms and obligations of such
contracts, agreements or amendments thereto."

Charter Schools Legislation

Chapter 46 of the Massachusetts General Laws was
enacted in July, 1997, amending the Education
Reform Act of 1993 and establishing guidelines for
charter schools across the state. Charter Schools
are established for several reasons, including

encouraging development and maintenance of
innovative and creative learning programs within
public education,

allowing educators more flexibility in working with
local school committees and unions,

giving parents and students greater choice in
learning programs,

presenting educators with opportunities and tools
to establish innovative and alternative educational
programs,

fostering performance-based educational
programs,

developing models for other schools to follow, and

providing students with opportunities to specialize
within academic areas.

Chapter 46 allows 50 charter schools. This total
includes 37 commonwealth charter schools and 13
Horace Mann charter schools. A commonwealth
charter school is a public school that is operated
under a charter granted by the Board of

SEH EME S AMG OF AAP aANne es

Education. Commonwealth charter schools
operate independently from local school
committees and are managed by a separate board
of trustees. Horace Mann charter schools are
either public schools or programs that operate
under a charter granted by the Board of Education
and approved by the local school committee and
the local bargaining agent.

Beginning in FY99, the state will absorb 100
percent of first-year tuition costs for new
commonwealth charter students. Each year,
thereafter, the state will absorb incrementally less
until the student’s fourth year when the local
school district will assume 100 percent of the
tuition cost.

The trustees for the Horace Mann charter schools
shall annually submit a budget request to the
superintendent and school committees for the
following year. In response to its budget request,
the Horace Mann charter school shall not receive
less funding than it would under the district’s
budgetary allocation rules.

Reserve Fund

Section 7 of Chapter 701 of the Acts of 1986
requires the creation of an operating budget
Reserve Fund to deal with “extraordinary and
unforeseen expenditures.” This section requires
that “prior to the date when the tax rate for a
fiscal year is fixed, [the City must] include in the
appropriations for such a fiscal year as a
segregated reserve fund a sum not less than 2 1/2
percent of the preceding year’s appropriations for
city and county departments, excepting the school
department...

“The mayor, with the approval of the city council,
may make direct drafts or transfers against this
fund before the close of the fiscal year, provided
that no such drafts or transfers be made before
June first in any fiscal year.

“Each transfer recommended by the mayor to the
city council shall be accompanied by written
documentation detailing the amount of such
transfers and an explanation for the transfer...”

The section also notes that “the school department
shall establish a segregated reserve fund of not
less than one percent of the current fiscal year’s
appropriations to the school department within

department reserve] fund before May first in any
fiscal year...”and “shall require the approval of the
mayor and the city council.”

Budget Allotment Process and Reallocations

Section 18 of Chapter 190 of the Acts of 1982, as
amended by Sections 8 and 9 of Chapter 701 of the
Acts of 1986, requires that “on or before August
first of each year, or within ten days of the annual
appropriation order for such fiscal year, whichever
shall occur later, the city or county officials in
charge of departments or agencies, including...the
school department, shall submit to the city
auditor, with a copy to the city clerk...an allotment
schedule of the appropriations of all personnel
categories included in said budget, indicating the
amounts to be expended by the department or
agency for such purposes during each of the fiscal
quarters of said fiscal year.”

The school department’s allotment may not be
greater than 20 percent for the first quarter and 30
percent in each of the remaining three quarters.
Allotments for city and county agencies may not
exceed 30 percent for first or second quarters or
be less than 21 percent for the third and fourth
quarters.

In addition, “whenever the city auditor determines
that any department or agency, including the
school department, will exhaust or has exhausted
its quarterly allotment and any amounts
unexpended in previous quarters, he shall give
notice in writing to such effect to the department
head, the mayor and the city clerk, who shall
transmit the same to city council.

“The mayor, within seven days after receiving such
notice, shall determine whether to waive or
enforce such allotment. If the allotment...is waived
or not enforced...the department or agency head
shall reduce the subsequent quarter's allotments
appropriately and the director of administrative
services, within seven days, shall state in writing
to the city council and the city clerk what
reductions in each subsequent quarter’s allotment
will be taken or what reallocations or transfers will
be made to support the spending level in each
subsequent quarter’s allotment. If the allotment
for such quarter is enforced and not waived,
thereafter the department shall terminate all
personnel expenses for the remainder of such

ten days of final approval of such appropriations. quarter...
No expenditures may be made from this [schoo]
Sthatupt ers amd) O;midsii nea me.e:s es

“No personal expenses earned or accrued, within
any department, shall be charged to or paid from
such department’s or agency’s allotment of a

subsequent quarter without approval by the mayor,

except for subsequently determined retroactive
compensation adjustments.

“Approval of a payroll for payment of wages, or
salaries or other personnel expenses which would
result in an expenditure in excess of the allotment
shall be a violation by the department or agency
head...

“To insure that the overall city and county
spending program remains in balance, the mayor
may reallocate no more than three million dollars
of non-personnel appropriations other than school
appropriations during a fiscal year to other
departmental purposes provided that in no
department from which appropriations have been
reallocated in accordance with this section shall
any transfers be made...from personal services to
non-personal services, except with the approval of
a two-thirds vote of city council, if such transfer
would require the layoff of departmental
personnel, who have been permanently appointed
to a position in the department...

“No reallocation may be made under this section
after April fifteenth in any fiscal year.

“A list of each reallocation made by the mayor
shall be transmitted to the city council and the ~
city clerk by the city auditor by April thirtieth in
any fiscal year. In each case, the report shall state
the accounts from which the transferred funds
were taken and the accounts to which the funds
were reallocated, and the reasons therefor.”

Transfer of Appropriations

Section 23 of Chapter 190 of the Acts of 1982, as
amended by Section 3 of Chapter 701 of the Acts of
1986, states that “after an appropriation of money
has been made...no transfer of any part of the
money thus appropriated, between such
department or office and another department or
office, shall be made, except in accordance with
and after the written recommendation of the
mayor to the city council, approved by a vote of
two-thirds of all the members of the city council,
provided that the city auditor, with the approval in
each instance of the mayor, may make transfers,
other than for personal services, from any item to

any other item within the appropriations for a
department, division of a department or county
office.

“After the close of the fiscal year, the city auditor
may, with the approval of the mayor in each
instance, apply any income, taxes, and funds not
disposed of and make transfers from any
appropriation to any other appropriation for the
purpose only of closing the accounts of such fiscal
year, provided further that the city auditor within
seventy days after the close of the fiscal year, shall
transmit to city council and the city clerk a report
listing what income, taxes, or funds were applied
and what transfers were made and the reasons
therefor.”

Penalty for Overspending Budget

Section 17 of Chapter 190 of the Acts of 1982
(Tregor) states that “[n]o official of [the] city or
county except in the case of extreme emergency
involving the health and safety of the people or
their property, shall expend intentionally in any
fiscal year any sum in excess of the appropriations
duly made in accordance with law, nor involve the
city in any contract for the future payment of
money in excess of such appropriations...

“Any official who violates the provisions of this
section shall be personally liable to the city for any
amounts expended intentionally in excess of an
appropriation to the extent the city does not
recover such amounts from the person to whom
paid...”

Appropriation Restrictions

Section 10 of Chapter 701 of the Acts of 1986
requires that “the mayor and city council shall
appropriate for the hospitalization and insurance
account an amount not less than the average of
the past three years actual expenditures from
those accounts. The city auditor shall certify, in
writing to the board of assessors, that adequate
funds are provided in the operating budget for
existing collective bargaining contracts...”

Restrictions on the Use of Proceeds from the
Disposition Of Surplus Property - Section 24 of
Chapter 190 of the Acts of 1982, as amended by
Section 4 of Chapter 701 of the Acts of 1986,

Statutes. and) Oiridiwneaniciess

requires that “proceeds from the disposition of any
surplus property shall be deposited in a separate

fund which shall be known as the Surplus Property

Disposition Fund, and shall be used only as
follows: (1) the amount equivalent to the debt
incurred, and interest paid or payable thereon, as
a result of the acquisition or improvement from
time to time of the property shall be used only for
purposes for which the city is authorized to incur
debt for a period of ten years or more [and] (2) all
proceeds in excess of such amount shall be
credited to the capital fund of the city unless the
city council by a majority vote determines with the
approval of the mayor to credit such proceeds to
the general fund of the city.”

Duties Of Supervisor Of Budgets

City of Boston Code Ordinance 5, section 5 states
that “[t]he supervisor of budgets shall, under the
direction of the mayor and in consultation with the
director of administrative services, prepare in
segregated form the annual and all supplementary
budgets...and shall report to the mayor on all
subsequent revisions of the items in any budget...

“The supervisor of budgets shall also prepare...all
transfer orders...

“The supervisor of budgets shall further
prepare...the form of estimate sheets to be used by
each officer, board and department, and each
division of a department for which the city
appropriates money, and the form of monthly
report of such officer, board and department, and
each division thereof, showing expenditures to
date of all appropriations by them.

“The supervisor of budgets shall, in addition, have
the powers and perform the duties conferred or
imposed on the budget commissioner by any
statute other than section 56 of chapter 35 of the
General Laws.”

Convention Center Legislation

Chapter 152 of the Acts of 1997, the convention
center legislation, was enacted on November 19,
1997. This legislation authorizes the development
and construction of a convention center in Boston
as well as borrowing for other convention center-
related projects in Worcester, Springfield,
Pittsfield, Fitchburg, Greater New Bedford,
Holyoke and for conducting studies of other areas
of the state.

Statutes and

Oita. Maine 8s

Under this legislation and through the joint efforts
of the Boston Redevelopment Authority (BRA) and
Massachusetts Convention Center Authority
(MCCA), the new Boston Convention and
Exhibition Center will be developed and
constructed on a 60-acre site in South Boston. The
facility, which is expected to be substantially
complete in Spring 2004, will include over 500,000
square feet of contiguous exhibition space in
addition to ballrooms, meeting rooms, banquet,
and lecture halls.

The enabling law authorizes the Commonwealth to
borrow up to $609.4 million for facility
construction and the City to borrow up to $157.8
million. If necessary, the City is also authorized to
borrow up to an additional $25 million for
acquisition and preparation of the land. The state
funds its share of expenses through several
methods, including convention center financing
fees from hotel, meals, beverage and sales taxes;
tourist, sightseeing and entertainment vehicle
surcharges, and vehicle rental surcharges ($10
each, of which $1 will be earmarked for Boston).

Boston’s expenses are funded through a Room
Occupancy Excise Fund encompassing four major
revenues. First, the City earmarks for the fund the
four-percent excise from new hotels that opened
on or after July 1, 1997. Second, the City receives a
$1 surcharge for car and truck rentals as part of
the state surcharge. Next, the City of Boston
receives a reimbursement from the state for its net
interest expense through June 30, 2003. Also, the
City will issue 260 additional hackney licenses
(200 have been issued to date). The first 200 taxi
medallions sold for an average of approximately
$167,000 each, and raised an estimated $33
million.

With the construction of the new convention
center, Boston is poised to become a major
competitor for international and national
convention and exhibition business, thereby
stimulating economic development and
investment. With new attractions, tourism-related
businesses will expand, thereby encouraging
secondary spending for transportation services,
recreation, and entertainment and at hotels,
restaurants, and retail stores. The ultimate
economic benefit will be new jobs, new businesses,
and new investment opportunities, resulting in an
improved quality of life for Boston residents.

New Fenway Park Legislation

The Massachusetts legislature enacted Chapter
208 of the Acts of 2000 (the “Fenway Park Act”) to
support the development of a replacement facility
for Fenway Park, the home field of the Boston Red
Sox. Subsequent to its passage, a 53% controlling
interest in the Red Sox was offered for sale. The
Red Sox temporarily set aside the process of
obtaining approvals required by Chapter 208 until
after completion of the sale. The Fenway Park Act
is site-specific. If and when the sale is completed,
should the new owner not opt for the Chapter 208
plan for replacing Fenway Park, new legislation
would be required if a plan put forth by the new
owner requires any substantial form of public
participation.

The Fenway Park Act authorizes EDIC to acquire a
site for the new ballpark adjacent to the existing
Fenway Park, to relocate current owners and
tenants and to demolish the existing structures on
the site, to remediate any environmental and other
hazards and to prepare the site for construction of
the new ballpark and to lease the prepared site to
the Red Sox on such terms and conditions as EDIC
and the Red Sox shall agree subject to the
approval of the City’s Collector-Treasurer. EDIC is
further authorized by the Fenway Park Act to
acquire an additional site adjacent to the new
ballpark and to construct up to a 3,000 vehicle
parking garage and related facilities on that site to
support the new ballpark. Separately, the Fenway
Park Act includes an appropriation by the
Commonwealth of $100 million for street, mass
transit, utility, landscape and other infrastructure
improvements outside of the new ballpark.

Subject to authorization by the City Council and
Mayor as described below, the City is obligated by
the Fenway Park Act to reimburse EDIC for up to
$140 million of costs incurred by EDIC to acquire
and prepare the ballpark site, and the act
authorizes the City to issue up to $140 million of
either general obligation bonds or special revenue
bonds for such purpose. All costs of site
acquisition and preparation in excess of $140
million, and all costs of construction of the new
ballpark shall solely be the responsibility of the
Red Sox. In addition, the City shall have no
obligation to reimburse EDIC for any costs of the
site acquisition and construction of the proposed
parking garage. For so long as any bonds of the

City are outstanding under the Fenway Park Act,
the act provides that the Red Sox shall pay rent to
EDIC for its lease of the ballpark site in an amount
equal to the debt service on such bonds, but in no
event more than $12.1 million annually, and EDIC
shall pay this rent over to the City for deposit in
the ballpark site fund. The act further provides
that the City shall credit certain facility
betterment fees, administrative parking fees and
sales and occupancy excise tax receipts collected
by the Red Sox or otherwise paid to the City
against the annual lease payments to be paid by
the Red Sox.

Neither EDIC nor the City is authorized to incur or
finance any cost of the ballpark site or the parking
garage project, and the Commonwealth is not
authorized to carry out any infrastructure
improvements, until, among other things, a
development plan for the projects shall have been
approved by the City Council and the Mayor, the
City Council and the Mayor shall have authorized
the bonds of the City required for the ballpark site
project, the City’s Collector-Treasurer and
Secretary of Administration and Finance shall
have approved a finance plan for the ballpark
prepared by the Red Sox, and the Red Sox shall
have agreed to the terms of a ground lease which
has been approved by the Collector-Treasurer. To
date none of the preconditions to commencing the
project has been satisfied.

The Boston Jobs and Living Wage
Ordinance

Chapter 3 of the Ordinances of 1998, amending
Chapter 5 of the Ordinances of 1997, was enacted
on July 1, 1998. This ordinance established
guidelines requiring companies and organizations
with city service contracts of $100,000 or more to
pay all workers a living wage of at least $9.11 an
hour. The Living Wage Advisory Committee is
considering recommendations for expansion of
this ordinance.

The intent of this ordinance is to balance a decent
wage for the working poor with economic
development in the business community. By
raising the wage level, it is expected that
consumer income will increase, poverty levels will
decrease, neighborhood businesses will be
invigorated, and the need for taxpayer-funded
social programs will decline. The Living Wage

Sitdastcur tress saan ade eObnsd ToneaenecacEs

level, higher than the federal minimum wage, is
designed to meet the needs of a family of four to
live at or above the federal poverty level.

This ordinance applies to for-profit companies
with 25 employees or more and non-profit
businesses with 100 employees or more.
Exemptions to this ordinance include school to
work programs, summer youth programs, seasonal
or part-time work, or where compliance would
result in extreme hardship.

Registration of Bicycle Messenger
Services and Licensing of Commercial
Messengers

Chapter 302 of the Acts of 1998, approved on
August 4, 1998, requires the registration of bicycle
messenger services and licensing of commercial
bicycle messengers in Boston. Although the
registration fee is nominal and will not have a
substantial impact on the City’s budget, the main
purpose for this law is to promote and maintain
public safety and traffic safety control. As part of
the registration process, each messenger must be
instructed in safe bicycling techniques in
accordance with section 11B of Chapter 85 of the
General Laws.

The Boston Police Commissioner issues numbered
permits (lightweight, reflective patches) that
must be displayed on either the messenger’s back
or backpack. A bicycle messenger is subject to a
fine for failing to carry a commercial bicycle
messenger license when conducting business. In
extreme cases for repeat offenders, the
commissioner may deny, suspend or revoke a
license. Messengers may request a hearing to
appeal. The Act exempts persons under 17 years
old who deliver newspapers or circulars.

In addition, each messenger must show proof of
insurance coverage for minimum amounts for
property damages, for injuries or death of a
person, and for injuries to or death of more than
one person in any one accident. Also, Bicycle
Messenger Services must provide workers
compensation coverage by law.

Changes in Contracting Procedures
Chapter 262 of the Acts of 1998 establishes that
any department, officer or board of the City of
Boston or Suffolk County must initiate a contract
when the amount involving a request for services
or purchase is $10,000 or more. Previously, the

Siteaateurioeus aan

amount requiring a contract was $2,000. Raising
the contract level reduces the amount of
processed paperwork, streamlines the acquisition
process, and reduces the time needed for retaining
goods and services.

Civil Service Changes

Chapter 282 of the Acts of 1998 requires that the
state Personnel Administrator certify current
provisional employees and provisional promotees
who have served in civil service positions within
the City of Boston for at least six months prior to
January 1, 1998 to permanent civil service status
in those positions. Under this law, approximately
3,100 employees became permanent civil servants.

Pension Funding Changes

To aid municipalities dealing with property tax
reduction due to Proposition 2 1/2, the state began
assuming the cost for local pension COLAs as of
1981. During the FY97 budget process, the state
clearly stated it would not fund local pension
COLAs in subsequent years. The state, however,
remains obligated to pay for local pension COLAs
awarded between FY81 and FY97.

The impact of assuming the funding for COLAs
granted after FY98 could have severely impaired
the City’s budget had Boston not changed its
funding schedule to fully fund pension liabilities
on a new, adjusted schedule. Specifically, without
any changes, the COLA costs would have increased
the City’s pension contribution by $27.9 million in
FY99 with an expectation of 4 1/2 percent growth
each year. However, the City instituted changes in
the funding schedule to offset the increased costs.

The City’s plan has three parts for decreasing the
impact of COLA funding. First, through a new
actuarial valuation of the State-Boston Retirement
System (SBRS), which is done at least every three
years, the City realized gains that reduced future
funding costs. This savings is a result of improved
investment returns and shifting future pension
obligations associated with the City’s former
Department of Health and Hospitals. This savings
is spread through the life of the funding schedule.

Next, the new valuation indicated a $20.3 million
savings in FY98, a year before Boston will pay its
first retirement COLAs. This amount will be
applied to offset future COLA costs for FY99, FY00
and FY01.

Die nea nc es 14

Finally, the City plans to extend unfunded pension
liability for retirees three more years, from FY03 to
FY06. This adjustment helps to offset the impact of
COLA increases beyond the immediate and near-
term future budgets.

Boston Public Health Act of 1995

The goal of the Boston Public Health Act of 1995
(Chapter 147) is to establish a new,
comprehensive health care system to meet the
challenges of a rapidly changing health care
environment and ensure continuous delivery of
high-quality health care services to residents. The
new health care network of public and private
partnerships unites outreach, health education,
prevention, outpatient and inpatient services,
home care, emergency care, specialty care,
aftercare, rehabilitation, and long-term care
services into an integrated continuum of care. The
overall goals are promoting health and well being,
meeting medical and public health needs, and
educating future physicians and caregivers. The
system also addresses cultural and linguistic
diversity to meet the health needs of persons of all
races, languages, cultures, and economic classes.

Chapter 147 abolished the Department of Health &
Hospitals and established the Boston Public
Health Commission (BPHC) in its place. With City
Council approval, the legislation allowed the City
to merge or consolidate the operations and assets
of the hospitals with the Boston University Medical
Center Hospital per the following guidelines:

“(1) ensuring the availability of a full range of
primary through tertiary medical programs, in
addition to a commitment to public health,
preventive, emergency and long term
rehabilitative care programs;

(2) serving both urban and suburban communities
in a culturally and linguistically competent
manner that strives to meet the current and
changing health care needs of people of all races,
languages, cultures and economic classes;

(3) providing a high degree of medical, nursing,
management and technical competency and
accountability;

(4) enhancing its role as a major academic
medical center, including support for bio-medical,

public health, medical education and basic science
research;

(5) providing managed care services to the
communities served by the new medical center
and participating effectively and competitively in
managed care plans serving the patient
population; and

(6) treating its patients, staff and the
communities served with respect and dignity.”

The network links the City’s new Public Health
Commission with private hospitals, community
health centers, the new Boston Medical Center,
and community-based organizations and providers.
Through this network, the commission offers a
myriad of health services, including primary care,
specialized services such as AIDS treatment and
prevention, communicable disease control, injury
prevention, substance abuse services, infant
mortality prevention, and ambulance services. In
addition, the commission operates the City of
Boston’s homeless shelter.

The budget should set forth the amount by which,
if any, the projected expenditures exceed revenues
and the net cost of public health services. If there
is a net cost of public health services, the budget is
subject to mayoral review and approval. The mayor
may approve or reject and return the budget to the
BPHC. If the budget is accepted, the mayor shall
include the net cost of public services in the City’s
annual budget and may submit supplementary
appropriations as needed. The BPHC must adopt
its budget no later than the second Wednesday in
June.

Classification of City Debt

Pursuant to the Bond Procedure Act of 1983, all
indebtedness of the City, other than certain
special obligation bonds, constitutes general
obligation indebtedness of the City for which its
full faith and credit are pledged and for the
payment of which all taxable property in the City is
subject to ad valorem taxation without limit as to
rate or amount. Pursuant to the 1982 Funding
Loan Act and the Bond Procedure Act of 1983,
general obligation bonds of the City may also be
secured by a pledge of specific City revenues
pursuant to covenants or other arrangements
established under a trust or other security
agreement. In addition, special obligation bonds of

Statutes and Ordinances

the City may be issued and be payable from and
secured solely by a pledge of specific revenues
derived from a revenue-producing facility of the
City. Indebtedness of the City may also be
classified by the nature of the City’s obligation for
the payment of debt service, depending on
whether such debt is a direct obligation of the City
or is an obligation of another governmental entity
for the payment that the City is indirectly
obligated.

Direct Debt-Indirect Debt

Direct debt of the City consists principally of the
City’s outstanding general obligation bonds. The
City’s direct indebtedness does not include the
City’s Revenue Refunding Bonds, Boston City
Hospital (FHA Insured Mortgage) Series B (the
Series B Bonds). The Series B Bonds, which
refunded the City’s Revenue Bonds, and Boston
City Hospital (FHA Insured Mortgage), Series A do
not constitute general obligations of the City to
which its full faith and credit are pledged. The
source of payments of principal and interest on the
Series B Bonds are payments on a mortgage note
for which the Boston Public Health Commission is
mortgagor and which is payable from revenues of
the Commission and, under certain circumstances,
city revenues subject to annual appropriation by
the City, with certain investment earnings.

Indirect debt of the City consists of a portion of
debt incurred by the Massachusetts Bay
Transportation Authority (MBTA). Although the
City is not directly obligated on bonds or notes
issued by the MBTA for such purposes, state law
provides for assessments against cities and towns
within the MBTA’s service area of the MBTA’s
expenses, including debt service not otherwise
paid from revenues or state assistance. Unpaid
assessments may be deducted from state aid
payments to the cities and towns. The City’s
assessment as of June 30, 2001 currently amounts
to approximately 44.2% of the total annual
assessment on all such cities and towns, this
represents a 1.2% increase over the prior year.

Secured Indebtedness

In addition to authorizing the City to secure its
indebtedness with letters of credit, the Funding
Loan Act of 1982 and the Bond Procedure Act of
1983 empower the City to secure any of its
indebtedness issued under any general or special

Seat uet ess mar nad

law by a pledge of all or any part of any revenues
that the City received from or on account of the
exercise of its powers. Examples include taxes
(such as real property taxes), fees payable to or
for the account of the City, and receipts,
distributions, and reimbursements held or to be
received by the City from the Commonwealth that
are not restricted by law for specific purposes.
Currently, the City does not have any outstanding
bonds secured by such a pledge. The City,
however, reserves the right in the future to issue
bonds, notes or other obligations secured by
various revenues of the City or by letters of credit.

Bond Procedure Act of 1983

In 1983, the City Council passed and the Mayor
signed a home rule petition to the state legislature
that enacted Chapter 643 of the Acts of 1983 of the
Commonwealth. This act, formally entitled the
City of Boston Bond and Minibond Procedure Act
of 1983, is referred to as the Bond Procedure Act of
1983. Effective January 2, 1984, the legislation
modified various procedural restrictions related to
the City’s issuance of indebtedness. Such
modifications provide, among other things, more
flexible schedules for repaying debt principal, the
issuance of variable rate bonds, term bonds and
bonds redeemable at the option of the bondholder,
and authorization for the sale of bonds at a
discount. The legislation also provides the City
with the authority to issue bonds in an amount up
to $5 million in any one fiscal year and notes in an
amount outstanding at one time of up to five
percent of the prior year’s property tax levy. Each
bond and note is issued in a denomination less
than $5,000 (known as minibonds and mininotes).
In addition, the legislation authorizes the issuance
of refunding bonds and grant anticipation notes, as
well as restating the investment powers of the City
and the extent to which city bonds are legal
investments for certain entities.

The Bond Procedure Act of 1983 also reaffirms
provisions of state law, indirectly affected by
Proposition 2%. This law requires that the City’s
annual tax levy must include the debt and interest
charges that are not otherwise provided for as well
as all general obligation indebtedness of the City
regardless of the date of issue.

In addition to modifications to the procedures
related to the City’s general obligation
indebtedness, the legislation authorizes the City to

Ord iin a ntcvess 143

finance revenue-producing facilities with special
obligation bonds payable from and secured solely
by a pledge of facility revenues. Under this act, the
City may also issue general obligation bonds
secured by the pledge of specific city revenues and
finance projects that otherwise could be financed
by bonds, lease, lease-purchase or sale-leaseback
agreements. The Bond Procedure Act of 1983 was
amended in August 1991 to provide, among other
things, for increased flexibility in establishing debt
principal amortization schedules.

Authorization of Direct Debt; Debt Limits
All direct debt of the City requires the
authorization of the City Council and approval of
the Mayor. If the Mayor should veto a loan order
passed by the City Council, the charter of the City
provides that the loan order is void and may not be
passed over the Mayor’s veto. Authorization of
bonds under a loan order of the City Council
includes, unless otherwise provided in the loan
order, the authorization to issue temporary notes
in anticipation of such bonds. Under the Bond
Procedure Act of 1983, temporary notes in
anticipation of bonds, including any renewals
thereof, must mature within two years of their
issue dates.

The laws of the Commonwealth provide for a
general debt limit for the City (and all other cities
of the Commonwealth) consisting of a Normal
Debt Limit and a Double Debt Limit. The Normal
Debt Limit is 2 1/2 percent of the valuation of
taxable property in the City as last measured by
the state Department of Revenue. The City may
authorize debt up to this amount without state
approval. The City may also authorize debt up to
twice this amount (the Double Debt Limit) with
the approval of the state Emergency Finance
Board. As of June 30, 2000, the City had
outstanding debt subject to the Normal Debt Limit
of $488.9 million and authorized but unissued,
debt subject to the Normal Debt Limit of $337.2
million. Based on the City’s Normal Debt Limit of
approximately $896.3 million as of such date, the
City could authorize an additional $170.3 million
within its Normal Debt Limit and an additional
$863.0 million, within its Double Debt Limit which
would be subject to state approval. The equalized
valuation as of January 1, 1998 for use in fiscal
2000 and 2001 is approximately $38.85 billion.

144

There are many categories of general obligation
debt which are exempt from the general debt limit
(although authorization of such debt is subject to
various specific debt limits, specific dollar
limitations or state approval). Among others, these
exempt categories include temporary loans in
anticipation of current and in anticipation of
reimbursements or other governmental aid,
emergency loans, loans exempted by special laws,
certain school bonds, and bonds for housing and
urban and industrial development. The latter
bonds are subject to special debt limits ranging
from 0.5% to 10 percent of equalized valuation
depending on purpose. On June 30, 2000, the City
had $288.4 million in outstanding debt exempt
from the general debt limit and $445.8 million in
authorized but unissued debt exempt from the
general debt limit.

Related Authorities and Agencies

In addition to direct and indirect indebtedness of
the City, the City and certain agencies and
commissions related to the City are authorized by
law to issue obligations that are solely a debt of
the agency or commission issuing the obligations
or are payable solely from revenues derived from
projects financed by such debt. Except, as
described below, such obligations are not a debt of
the City.

The Boston Public Health Commission is an
independent corporate and political subdivision of
the Commonwealth created in June 1996 as the
successor to the City’s Department of Health and
Hospitals (DHH). Effective July 1, 1996, all powers
and functions of DHH and THH (Trustees of
Health & Hospitals) were transferred to the
commission. In addition, the commission assumed
all assets and liabilities of the City allocable to
DHH. At its inception, the Commission also
assumed responsibility for paying the City an
amount equal to current debt service on all
outstanding general obligation bonds of the City
issued for public health and hospital purposes.
Such bonds were outstanding on June 30, 2000 in
the aggregate principal amount of $26.4 million.
These bonds are the City’s general obligations
whose outstanding amount is shown on the City’s
debt statement. The commission has also assumed
responsibility for paying the current debt service
on the City’s Revenue Refunding Bonds, Boston

Statutes and Ordinances

City Hospital (FHA Insured Mortgage) Series,
which were outstanding on June 30, 2000 in the
aggregate principal amount of $150.0 million. The
Series B Bonds are not general obligations of the
City, but are secured by a mortgage on the former
Boston City Hospital campus. Payments of
principal and interest on the mortgage are insured
by the federal government through the Federal
Housing Administration. The commission expects
to meet its mortgage and Series B Bond
obligations through a portion of the rent payable to
the commission by Boston Medical Center
Corporation for its lease of the former Boston City
Hospital campus and investment earnings on
reserves for the Series B Bonds. Subject to
appropriation by the City, under certain
circumstances such as default by Boston
University Medical Center under the lease, City
revenues may be required to satisfy the debt
service requirements on the Series B Bonds.

The Boston Water and Sewer Commission (BWSC)
is an independent political and corporate
subdivision of the Commonwealth created in July
1977. At its inception, BWSC assumed
responsibility for the operation of the City’s water
and sewer systems and for paying to the City an
amount equal to current debt service on all
outstanding bonds the City issued for water and
sewer purposes. All debt service has been paid as
of June 30, 2000. The City is not obligated on
bonds issued by the commission.

The Economic Development and Industrial
Corporation of Boston (EDIC) is a political and
corporate entity of the Commonwealth consisting
of five members who are also appointed as
members of the Boston Redevelopment Authority
(BRA). EDIC has a variety of powers to assist
industrial development projects in the City. EDIC
is not authorized to issue debentures in excess of
$5 million secured solely by the credit and
properties of EDIC and revenue bonds secured by
revenues from the lease or sale of its projects. The
City is also authorized to appropriate or borrow
monies for EDIC development projects within
certain urban renewal debt limitations.

The BRA is a public political and corporate body
that combines the City’s redevelopment and
planning board authority with certain powers of
the state Department of Community Affairs. The
BRA board consists of four members appointed by
the Mayor, subject to confirmation by the City

Sti dst Wit ¢secaun.d

Ose dc invaaneceers

Council, and one member appointed by the state
Department of Community Affairs. The BRA
provides the planning support for major
construction and redevelopment activity in the
City. Although the BRA is authorized to issue
revenue bonds and notes that are not city debts,
the BRA traditionally finances its projects through
a combination of federal and state grants,
proceeds of general obligation bonds issued by the
City, and revenues from the lease or sale of land.

Major Debt Statutes and Borrowing
Authority

Chapter 44, Section 7 of the Massachusetts
General Laws permits cities and towns in the
Commonwealth to incur debt within the statutory
limits of indebtedness described previously for
various municipal purposes and identifies the
maximum maturity period for each purpose. The
purposes include, but are not limited to, the
original construction and equipping of municipal
facilities, repairs and renovations to existing
municipal structures, improvements to parks and
playgrounds, reconstruction and resurfacing of
roads, roadway and street lighting, and equipment
acquisitions.

The Capital Improvements Act of 1966, as
amended, permits the City of Boston to issue debt
outside the debt limit for various municipal
purposes, including new construction and
renovation of existing facilities. The legislation
provides a specific limit on the total amount of
debt that may be issued under the statute.

Chapter 70B of the Massachusetts General Laws
provides for the issuance of general obligation
debt for certain school projects approved by the
State Board of Education under the School
Building Assistance program. Under the program,
the state reimburses a percentage project costs to
the City’s General Fund annually.

145

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Boston s People and Economy

INTRODUCTION

The City of Boston was first incorporated as a town
in 1630, and as a city in 1822. It is one of America’s
oldest cities, with a rich economic and social
history. What began as a homesteading
community, and eventually evolved into a center
for social and political change, has since become
the economic and cultural hub of New England.

As the region’s hub, Boston is home to over 589,000
residents, many institutions of higher education,
some of the world’s finest inpatient hospitals, and
numerous cultural and professional sports
organizations. Boston-based jobs, primarily within
the finance, health care, educational, and service
areas, numbered over 680,000 in 1999. Almost
thirteen million people visited Boston in 2000 to
take in its historic neighborhoods, attend cultural
or sporting events, or conduct business.

The City provides a wide range of programs and
services to meet the diverse needs of its many
residents and visitors. Under the direction of
Mayor Thomas M. Menino, the City is also
aggressively pursuing new economic opportunities
to ensure Boston will emerge as a global leader in
the twenty-first century.

Boston's Role in the Regional Economy

The City of Boston is the 21st largest city in the
United States. The U.S. Bureau of the Census
reported Boston’s population as 574,283 in 1990
and as 589,141 in 2000. Boston is the center of the
seventh largest Consolidated Metropolitan
Statistical Area (CMSA) in the nation. As a CMSA,
Boston had a total population of 5.8 million in 2000
as reported by the U.S. Bureau of the Census.

In addition to having one of the largest
concentrations of population, Boston also ranks
among the highest in concentration of employment
and income in the U.S. In 1999, Boston supplied
682,838 jobs, or approximately one out of every

Byors to in ais =P veyorn tite sa anid

thirteen jobs in New England. Boston provides
employment opportunities for many people who
live outside of the City. The City had 9.3% of the
state’s population in 2000, but measured in terms
of jobs, Boston’s economy accounted for
approximately 17% of the Massachusetts economy
in 1999. In terms of income, Suffolk county, which
is comprised of 97% Boston population, ranked 44"
in per capita personal income among over three
thousand counties in the U.S. in 1998.

The attributes that make Boston such a great city
in which to conduct business also make it a great
destination for tourists. According to the Greater
Boston Convention and Visitors Bureau, an
estimated 12.9 million people visited Boston in
2000, up from 11.9 million in 1999.

Boston is an attractive destination for conventions,
meetings, and gate shows. Currently, Boston has
three sites for small and medium size conventions:
the John B. Hynes Veterans Memorial Convention
Center, the World Trade Center, and the Bayside
Exposition Center. A fourth convention site, which
will be able to accommodate larger conventions, is
currently in the early stages of construction.

The new Boston Convention and Exhibition Center
will be located on a 60-acre site in South Boston.
The plan calls for development of a facility
containing more than 500,000 square feet of
contiguous exhibition space, as well as ballrooms,
meeting rooms, banquet halls, lecture halls, and
underground parking. Land acquisition was
completed and groundbreaking occurred in the
spring of 2000. The convention center is funded by
a combination of City and Commonwealth revenue
sources. Construction of this facility along with
many new hotel projects in the City will give a
significant boost to the local economy and help to
position Boston as a world class city of the future.

With travel to Boston so popular Boston’s hotel
market is currently one of the strongest in the

Economy 147

nation. During 2000, Boston hotels had an average
occupancy rate of approximately 80%, up from
65.4% in 1991. With high occupancy levels, prices
for rooms have risen steadily. During 2000, the
average daily room rate at Boston hotels was
around $200, as compared to $109.29 in 1991.

With high occupancy and room rates and the new
Boston Convention and Exhibition Center on the
horizon, Boston is attracting new hotel
construction. Three new hotels representing 835
new rooms were under construction as of August
2001. Fifteen other hotel projects representing a
total of 5,158 rooms have requested approval by
the Boston Redevelopment Authority.

Boston's Changing Economy

The nature of Boston’s economic base has changed
dramatically over the past three decades. In 1970,
manufacturing and trade jobs accounted for 33% of
the total economy, while financial and service
sector jobs totaled 38%. In 1999, manufacturing
and trade jobs accounted for only 16.2% of the
total economy while financial and service sector
jobs totaled 61.5%. These trends mirror a national
movement from an industrial-based economy to a

Key Indicators of Boston's Economy

Population Total Population
% Minority Population
Income Median Household Income
Education % High School Graduate
% Some College Completed
% College Graduate
Employment Unemployment Rate

Number of Jobs

% Blue Collar Jobs

% White Collar Jobs

% Manufacturing Jobs

% Trade Jobs

% Finance Jobs

% Service Jobs
Office Market Vacancy Rate
Median House Price
Housing Units

% Vacant Units
Condominium Units

% Condominium Units

Real Estate
Housing

Rental Vacancy (Boston Metro Area)

Sources:

service-based economy.

The City’s resident workforce is undergoing a
transformation as well. Of the 576,125 people
working in Boston in 1970, 28% held blue-collar
jobs and 55% held white-collar jobs. In 1990, of
622,433 Boston workers, those holding blue-collar
jobs fell to 16%, and those employed in white-
collar occupations rose to 67%. The majority of
these white-collar jobs are within the finance,
health care, education, and other broad-based
service industries. (Table 1.)

The changing needs of a service and information-
based economy have increased the demand for a
more educated, more highly skilled workforce. In
1990, 76% of the adults in Boston had completed
high school, compared to 53% in 1970. A full 30% of
adults in Boston had completed college in 1990,
compared to only 10% in 1970.

Boston's Changing Population

In a thirty-year span, Boston’s population declined
from 801,444 in 1950 to 562,994, or by 30%, in 1980.
This decline can largely be attributed to fewer
families with children and a flight to the suburbs
for percieved better schools and less crime. Since

Boston Redevelopment Authority, Federal Reserve Bank of Boston, U.S. Census Bureau,

Massachusetts Division of Employment and Training.

148

BOS to ns

1970 1980 1990 Recent
641,071 562,994 574,283 589,141 ('00)
18% 30% 37% 50.5% ('00)
$7,935 $12,530 $29,180
34% 35% 27%
9% 13% 19%
10% 20% 30%
12.8%('75) 7.8%('83) 8.6% ('91) 4.6% (7/01)
576,125 572,078 622,433 682,838 ('99)
28% 22% 16%
55% 60% 67%
11% 9% 5% 4.1% ('99)
22% 16% 13% 12.1% ('99)
13% 13% 15% 15.8% ('99)
25% 36% 42% 45.7% ('99)
2% 1% 15% 1.5% ('00)
na $71,700 $174,100 $352,000 (2Q'01)
232,400 241,300 250,863 251,935 ('00)
6% 10% 9% 4.9% ('00)
na 4,500 33,000
na 2% 13%
na na 6% 3.0% ('00)
Table 1

People and Economy

1980, however, the City’s population has stabilized.
The 2000 U.S. Census records the City’s population
at 589,141, representing a 2.6% increase over the
1990 population.

A wide range of ethnic backgrounds and countries
of origin can be found in Boston’s population. The
recent census results confirm that Boston’s
minority population is now the majority for the
first time in history. Boston’s rich cultural heritage
is also reflected in the diversity of its
neighborhoods. Because the Mayor is aware of the
fact that many of the people who move to Boston
each year come from different cultural
backgrounds and have a first language other than
English, he has created the Office of New
Bostonians. The mission of this office is to
strengthen the ability of residents from diverse
cultural and linguistic communities to play an
active role in the economic, civil, social, and
cultural life of the City of Boston.

The Role of Higher Education, Health Care,
and Financial Services

Higher education, health care, and financial
services play a major role in the Boston economy.
An examination of Boston’s 48 largest private
employers shows 28 are involved in these growing
sectors.

Many of the nations finest research and teaching
hospitals are located in Boston, including
Massachusetts General Hospital, Brigham and
Women’s Hospital, Beth Israel/Deaconess
Hospital, Boston Medical Center, New England
Medical Center and Children’s Hospital. There are
a total of 25 inpatient hospitals in the City. The
City is also home to the medical and dental schools
of Harvard University, Tufts University and Boston
University, as well as numerous community-based
health centers. In 1999, there were an estimated
95,767 people employed in health services in the
City.

Boston also hosts 39 institutions of higher
education. Included among the City’s universities
are some of the finest educational institutions in
the country, including Boston College, Boston
University, and Northeastern University.

Biousit0 Das mie 0p Ikeuwea nod

These institutions of higher education have a
major impact on the City’s economy. Boston
colleges and universities enrolled approximately
135,771 students in the fall of 1998. Because many
of these students remain in Boston after
graduation, Boston’s educational institutions are a
major source of new highly skilled professionals
for the City’s work force. Boston colleges and
universities add to the economy in other ways as
well. From 1991 through 1998, over $300 million of
large construction projects at educational
institutions in Boston were completed.

Many. of the country’s leading financial services
firms are located in Boston, including Fidelity
Investments, John Hancock Mutual Life Insurance
Company, Putnam Investments, and State Street
Bank & Trust Company. The City also has the
distinction of being the birthplace of the mutual
fund industry. In 1999, there were an estimated
107,959 people employed in financial services,
insurance, and real estate in the City.

Transportation

A key to Boston’s economic health is the City’s
ability to transport residents, workers, and visitors
efficiently and safely to their intended
destinations. Boston’s public transportation
system reaches into all of the City’s neighborhoods
and is linked to the commuter rail system,
connecting millions of people to the central City.

The roadway system provides commuters access to
Boston through surface arteries and three limited
access interstate highways that connect Boston to
the national highway system. Interstate 90, the
Massachusetts Turnpike, leads westward from
downtown Boston to the New York State border.
Interstate 95, the East Coast’s principal north-
south highway, connects Boston to New
Hampshire and Maine to the north and New York
City and Washington D.C. to the south. Interstate
93, another north-south highway, extends from
just south of the City to New Hampshire. Major
industrial parks and high-technology companies
line these transportation arteries.

In 1999, Boston’s Logan International Airport was
the most active airport in New England, the 18th
most active airport in the United States, and the
29th most active airport in the world. In FY00, 27.3
million domestic and international passengers

EeCaonneoumny 149

were served at Logan airport by 44 domestic and
14 international airlines. Logan Airport is also very
important to the economy as a center for
processing air cargo.

The Port of Boston provides New England
businesses with excellent deep-water port
facilities and access to world ports, as well as
feeder service to Halifax, Nova Scotia, and New
York. In 1990, the Port of Boston ranked as the
18th largest American seaport by total tonnage
shipped. The Port of Boston is also a major cruise
ship port, hosting 167,000 cruise ship passengers
in FY00.

Quality of Life

Since he first took office, Mayor Menino has made
the quality of life in the neighborhoods a priority.
Under his leadership, Boston’s neighborhoods have
become more active and at the same time much
safer. Boston’s public safety departments continue
to receive national recognition for the progress
that they have made in making Boston a safer
place to live and work.

For the Boston Police Department, the facts speak
for themselves. Today, the crime rate in Boston is
the lowest it has been in decades. One of the
cornerstones of the Police Department’s success
has been the Same Cop Same Neighborhood
program (SC/SN). Under SC/SN, the same beat
officers are regularly assigned to the same
neighborhood and will spend no less than 60% of
their beat in that neighborhood.

The Boston Public Works, Parks & Recreation,
Transportation, and Property Management
Departments have been hard at work as well
implementing the Mayor’s focus on the Zhree 7's:
Trees, trash, and traffic. Since the Mayor directed
the departments to focus on these issues, the
Parks & Recreation Department, in parks and
along streets has planted thousands of trees. The
Transportation Department, in conjunction with
the Police Department, has worked extensively in
a rapid response mode to implement the Mayor's
Let's Get Moving campaign to ease travel through
and around the City. Code Enforcement within
the Property Management Department has been
steadily enforcing existing laws with regard to
curbside residential trash violations and results of
cleaner neighborhood streets are visible.

1a 0 Beoss. to. nes

Keeping Boston a safe, clean and easily traversed
City in which to live and work helps position the
City to make strides economically.

Economic Outlook

As with any economic entity, the City of Boston has
seen good times and bad. During the 1960s, the
economy thrived and unemployment was
consistently below 6%. In the 1970s, Boston
experienced the same pain felt across the country
as a national recession took hold.

From 1982 to 1989, a strong economy contributed
to significant increases in real estate values in
Boston and the surrounding area. Housing prices
and rental rates increased dramatically. The 1990-
1991 recession reversed this trend temporarily.
Positive trends reappeared in the latest expansion
between 1992 and 2000.

Since 1992, construction activity in the City has
stabilized, and is now strong. In fiscal 2000,
building permit revenues indicated an estimated
potential construction activity level of $2.1 billion
in the City. Commercial rents have risen steadily
as the City’s office market vacancy rate has
decreased significantly, from a high of 17.7% in
1991 to 1.5% through the end of 2000 and 3.2%
through June 2001. Due to the dropping office
vacancy rate and the continued high hotel
occupancy levels in Boston, developers are
contructing or planning numerous office and hotel
projects in the City.

Jobs are still plentiful in Boston. Boston’s
unemployment rate peaked during 1991 at 8.6%
but has declined to 4.6% as of July 2001. This
compares favorably with the national rate of 4.9%
in August, but is still significantly over the
Massachusetts rate of 3.8%.

Currently, the City is aware of the economic
downturn throughout the nation, region and state.
Due to the City’s revenue structure, the City is
able to weather short economic problems without
interruption of basic city services. It is only in the
case of a protracted economic event that the City
could face revenue issues where services would be
affected. It is uncertain what the nation, state and
the City will face in the coming year, but in any
case the City is ready.

B60 p fe #2 no PE ee wom.

Economic Development

Recent trends indicate that Boston’s economy is
growing steadily. With the election of Thomas M.
Menino as the Mayor of Boston, a new cabinet
form of government was established to create
greater efficiency and improve the delivery of City
services. Within this new structure, a Chief
Economic Development Officer (CEDO) cabinet
position was created. The CEDO is charged with
developing a successful strategy for promoting the
economic viability of the City. Two of the major
agencies responsible for economic development
under this cabinet, the Boston Redevelopment
Authority and the Economic Development and
Industrial Corporation, have consolidated services
to allow for a more coordinated, comprehensive
approach to planning and development.

Current public sector projects impacting the
Boston economy include the Central Artery/Third
Harbor Tunnel project and the Boston Convention
and Exhibition Center. The federal government
primarily funds the first project with the
Commonwealth covering the rest of the cost and
the second is a City/State combined effort.

The Central Artery/Third Harbor Tunnel project is
the largest public works project in the country, at
a recently estimated cost of $14.475 billion. It is
estimated that this project will have employed
15,000 workers during the peak years of
construction (1998 to 2001). When completed, the
new depressed Central Artery and Ted Williams
Tunnel are expected to alleviate traffic congestion
throughout the City, make Logan Airport and East
Boston more accessible, and support new
development in South Boston.

The development of the Boston Convention and
Exhibition Center (BCEC), to include over 500,000
square feet of contiguous exhibition space on a 60-
acre site in South Boston, is a joint effort of the
City, the Commonwealth, the Boston
Redevelopment Authority (BRA) and the
Massachusetts Convention Center Authority
(MCCA).

The BRA, in charge of site acquisition and
preparation, has completed the acquisition and
has nearly completed relocation of the tenants, as
well as demolition and environmental
remediation.

BeO, Sst On meSee bee) OFDM eC mmaened

Work by the MCCA has commenced on the design
and construction of the BCEC Project. The MCCA
has engaged an owners representative, a designer,
a construction manager, and has begun qualifying
subcontractors. Groundbreaking for construction
of the BCEC Project took place in the Spring of
2000. The BCEC Project is expected to be
substantially completed by Spring 2004, with
initial convention business beginning several
months thereafter.

State legislation was passed in 2000 in support of
construction of a new Fenway Park adjacent to the
existing Fenway Park --- as a City/State/Private
collaboration. Subsequent to its passage, a
controlling interest in the Red Sox was offered for
sale. The Red Sox temporarily set aside the
process of obtaining approvals required by the
legislation until after completion of the sale.

There are many other economic development
projects proceeding in Boston. These include
plans to develop the East Boston and South Boston
waterfront districts, further enhancements to
Boston’s neighborhoods through the
Empowerment Zone and Main Streets initiatives,
and continuing development of retail and business
districts.

Improvements are planned to parks and
neighborhoods to connect residents to the
waterfront areas. In South Boston, in addition to
the new convention center, there are also plans for
hotel, retail, and residential housing development
to attract new workers and visitors to the area.

Partnerships have and will continue to play an
important role in revitalizing Boston’s
neighborhoods. In January 1999, the City of Boston
was designated an Empowerment Zone community
by the U.S. Department of Housing and Urban
Development. The ten-year Empowerment Zone
designation brings with it $130 million in tax-
exempt bonding authority and $100 million in
grants to finance sweeping revitalization and job
creation programs.

There are currently 19 Boston business districts
participating in the Main Streets Program, a
partnership between the City and the National
Trust for Historic Preservation. This program has
created new businesses and jobs, improved the
marketability and business strategy of business

ENCvOunsONIn e591

districts, and preserved the character of
surrounding residential areas.

Another sign of solid investment in retail in the
City are the projects underway in the
neighborhoods to build new supermarkets and
expand others. Other retail projects are completed
or partially completed and include retail and
theater space at Millennium Place on Lower
Washington Street and more retail and theater
space at the Landmark Sears Building in the
Fenway. Home Depot opened a large store at the
South Bay Center Mall, the first inner-city store for
the company.

With a diverse economic base and educated work
force, growing tourism and an expanding hotel and
office market, a new convention center on the
horizon, and safe neighborhoods, Boston is a world
class City able to withstand economic change and
still be ready for the new millennium.

15? 2 BioeSetao une

People

and

EsceoPn Onmey

Budget Organization
and Glossary of Terms

Introduction

This Chapter is a guide to the organization of
Boston city government and the FY02 Operating
Budget.

The City of Boston, incorporated as a town in 1630
and as a city in 1822, now exists under Chapter 486
of the Acts of 1909 and Chapter 452 of the Acts of
1948 of the Commonwealth which, as amended,
constitute the City’s charter. The chief executive
officer of the City is the Mayor. Reelected in
November 1997, Mayor Thomas M. Menino is
serving a four-year term ending in January 2001.
The Mayor has general supervision of and control
over the City’s boards, commissions, officers, and
departments. The portion of the City budget
covering appropriations for all departments and
operations of the City, except the School
Department, and a portion of the operations of
Suffolk County, is prepared under the direction of
the Mayor.

The legislative body of the City is the Boston City
Council, which consists of thirteen members
serving two-year terms, of whom four are elected
at-large and nine are elected from geographic
districts. The City Council may enact ordinances
and adopt orders that the Mayor may either
approve or veto. Ordinances and orders, except for
orders for the borrowing or appropriation of
money, may be enacted by the City Council over
the Mayor’s veto by a two-thirds vote. The City
Council may reject or reduce a budget submitted
to it by the Mayor, but may not increase it.

Organization of City Government: The
Mayor's Cabinet

Upon election, Mayor Menino implemented a new
cabinet structure in the executive branch of city
government. The cabinet structure delineates the
major functional responsibilities of city
government to improve the conduct of executive
and administrative business of the City and to

Budget Organization

and

eliminate duplication and waste. The Cabinet
presently consists of fourteen cabinet members:
Chief of Staff, Chief Operating Officer, Chief
Financial Officer, Chief Economic Development
Officer, Chief of Education, Chief of Human
Services, Chief of Basic Services, Chief of
Environmental Services, the two Chiefs of Public
Safety, Chief of Public Housing, Chief of Public
Health, the Corporation Counsel (the City’s chief
legal officer), and the Chief of Housing and
Neighborhood Development. Reflecting the
importance of strengthening Boston’s communities
and improving livability for residents, the Mayor
has formed a new cabinet, Housing and
Neighborhood Development.

The structure of the Mayor’s cabinet is illustrated
in the citywide organizational chart displayed on
the next page. A description of the members of the
Mayor’s cabinet, the City departments for which
they have authority, and their individual
responsibilities, follows.

Chief Operating Officer

The COO is the key individual responsible for the
daily administration of the entire city government
and directly oversees Management Information
Systems, Human Resources (including Workers’
Compensation program), Health Insurance,
Workers’ Compensation Fund, Unemployment
Compensation, Graphic Arts, and Labor Relations.
The COO reports directly to the Mayor and is
responsible for ensuring satisfactory performance
of city managers.

Chief Financial Officer

The Chief Financial Officer (CFO), who also
serves as the Collector-Treasurer, oversees all city
financial matters, including the functions of the
Treasury, Assessing, Auditing, and Purchasing
departments, the Office of Budget Management
(OBM), Pensions & Annuities, Medicare
Payments, and the Taxpayer Referral and

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Assistance Center (TRAC). The Retirement Board,
an independent board under Chapter 306 of the
Acts of 1996, now has its expenses funded through
investment earnings, but remains part of the
Finance Cabinet. The City’s Collector-Treasurer is
responsible for supervision of the City’s Treasury
Department, revenue collections due the City of
Boston and Suffolk County, management of city
borrowings, and city payments, including amounts
due on borrowings by the City in the form of either
temporary or permanent debt.

Chief Economic Development Officer

The Chief Economic Development Officer is
accountable for the planning, development, and
marketing functions of the City. The Director of
the Boston Redevelopment Authority (BRA) serves
as the Cabinet Chief. The Economic Development
Cabinet is composed of the Boston Redevelopment
Authority/Economic Development and Industrial
Corporation (BRA/EDIC), the Office of Minority
and Women Business Enterprises, the Boston
Residents Jobs Policy Office, and the Office of
Special Events and Tourism.

Chief of Education

The Superintendent of the Boston Public Schools
serves on the Mayor’s cabinet. Among the Cabinet
responsibilities of the Superintendent is the
development of a plan for schools and other city
and non-city agencies to develop cooperative
programs guaranteeing the best possible
educational resources for Boston’s children. The
Superintendent is appointed by the Boston School
Committee and serves as the Chief Executive
Officer of the Boston Public Schools.

Chief of Human Services

The Human Services Cabinet is responsible for
providing social services for Boston’s citizens. This
cabinet includes the Office of Cultural Affairs,
Boston Community Centers, the Elderly
Commission, the Emergency Shelter Commission,
the Women’s Commission, the Veteran’s Services
Department, the Office of Community
Partnerships, and the Office of Civil Rights, which
is comprised of the Fair Housing Commission, the
Commission for Persons with Disabilities, and the
Human Rights Commission. The Office of
Community Partnerships, headed by the Chief of
the Human Services Cabinet, is responsible for the

Budget Ofganhization

and

community-based anti-drug and health
improvement programs, in addition to running the
Office of Children and Family Services.

Chief of Basic Services

Boston’s infrastructure and direct-service
activities are managed by the Basic Services
Cabinet. The Basic Services Cabinet is composed
of the Public Works Department, the Parks and
Recreation Department, the Property Management
Department, the Central Fleet Maintenance unit,
the Election Department, Consumer Affairs and
Licensing, the Registry Division, the Boston Public
Library, and the Youth Fund. One of the major
goals for this Cabinet is investigating opportunities
for applying technological innovations to reduce
costs and/or improve the delivery of basic services.

Chief of Environmental Services

The Environmental Services Cabinet is made up of
the Environment Department, the Inspectional
Services Department, the Boston Water and Sewer
Commission, and the Transportation Department.
Other programs in the Cabinet include the
Recycling Program of the Public Works
Department, the Open Space Planning and
Olmsted System Revitalization programs of the
Parks and Recreation Department, and the
Grassroots Program of the Department of
Neighborhood Development. The Chief of
Environmental Services oversees the City’s
relationships with the Central Artery/Third Harbor
Tunnel project, the federal Environmental
Protection Agency, the state Executive Office of
Environmental Affairs, the Metropolitan Area
Planning Commission, and the Massachusetts Bay
Transportation Authority (MBTA).

Chiefs of Public Safety

The Public Safety Cabinet includes the Boston
Police Department and Boston Fire Department.
The Police Commissioner and Fire Commissioner
both serve on the Mayor’s cabinet. Together, they
review opportunities for consolidated and shared
resources to provide more efficient public safety
services to Boston’s communities.

Executive Director of the Boston Public
Health Commission

The executive director of the Boston Public Health
Commission (BPHC) oversees public health

Galioy S-S) a ry e545

delivery in the City by hospitals, health centers
and community organizations, as well as providing
the City’s emergency medical services.

Administrator of the Boston Housing
Authority

The Administrator of the Boston Housing
Authority (BHA) serves on the Mayor’s cabinet as
the Chief of Public Housing. The BHA is an
independent authority overseeing public housing
developments and senior housing locations
throughout the City.

Chief of Housing and Neighborhood
Development

The Housing and Neighborhood Development
Cabinet is composed of two departments, the
Department of Neighborhood Development and
the Rental Housing Resource Center. These
departments work together to build strong
neighborhoods, develop and preserve local
businesses, and improve housing stock. In
addition, these departments assist people seeking
housing, provide shelter and support services, and
assist tenants with problem resolution and
mediation with landlords.

Corporation Counsel

The Corporation Counsel has supervisory authority
over all City attorneys and legal affairs and
represents the City of Boston and Suffolk County
in litigation. The Law Department provides an
array of legal services, including formal and
informal opinions and advice to the Mayor, the
City Council, the Boston School Committee, and
other officials in matters relating to their official
duties. The department also represents the same
parties in litigation, reviews all city and county
contracts, pursues Claims on behalf of the City
through affirmative litigation, and initiates
foreclosure proceedings on tax delinquent
property.

Mayor's Chief of Staff

The Mayor's Chief of Staff oversees the day-to-day
operations of the Mayor’s Office, and responds to
requests and critical issues efficiently and
effectively. In addition, the Chief of Staff keeps an
open, direct line of communication between the
Mayor and Boston’s communities in pursuing

| as

Budget

resident concerns. The Mayor’s Office includes the
Office of the Mayor, Neighborhood Services, Public
Information, Intergovernmental Relations, the
Office of New Bostonians, and the Boston 2:00 to
6:00 Office.

An All-Funds Budget

FY02 is the fourth year that the City of Boston is
presenting a fully integrated budget, including
capital, operating, and external funds. Previous to
FY99, the City presented separate capital and
operating budgets. The capital and operating
budgets are now incorporated to show the full
level of funds available to departments to fulfill
their missions.

The operating budget maintains the day-to-day
operations for departments to provide goods and
services whereas the capital budget reflects long-
term needs and planning for infrastructure
development and repairs. The capital budget funds
new construction or renovations to existing city-
owned facilities (for example, police and fire
stations and schools), infrastructure
improvements (for example, roads, sidewalks, and
lights), and major equipment purchases such as
fire-fighting apparatus. The external funds budget
describes the projects and programs that the
departments will be undertaking in the next fiscal
year, which are financed with funding received
from the state, federal or other non-general fund
sources.

Organization of the Budget

The City of Boston’s Program Budget provides a
wealth of information related to City services and
their associated costs. The Operating and Capital
Budgets present recommended resource
allocations in terms of personnel, facilities, goods,
and services. The budget document also describes
the kinds of services provided by city and county
departments as well as the levels of services that
will be achieved in FY02.

The Operating and Capital Budget
Document: Organization of the Volumes
Volume I provides a citywide review of information
on the FY02 budget and the context in which it is
prepared. Sections include:

e Executive Summary,

O'r g aonaiez a tion and

Glossary

e Summary Budget FY02-FY03,

e City Council Orders,

e Revenue Estimates and Analysis,

e Innovations in Education,

e FY02 Budget and Performance Goals,
e Financial Management,

e Capital Planning,

e Statutes and Ordinances,

e Boston’s People and Economy, and

e Budget Organization and Glossary.

In Volume II, cabinet and departmental budgets
are presented, with the departmental budgets
organized by cabinet. The cabinet presentation
includes cabinet mission and initiatives, followed
by a table displaying total operating, external and
capital budgets beginning with FY99 actual results
through the FY02 budgets.

The Departmental Operating Budgets
Activities and services of the City are grouped into
programs for budgeting and management
purposes. The operating budget for each
department is presented on a program-by-program
basis.

A “program” is defined as:

An organized group of activities, and the resources
to carry them out, that is directed toward attaining
one or more related objectives.

For the purposes of program budgeting and
program evaluation, a program can consist of
direct services to the public and neighborhoods of
the City (police patrol or voter registration), or
traditional city staff functions (administrative
services or engineering and design).

Some city activities may not be defined as separate
programs even though they may be self-contained
operations. For example, a fire station is not a
separate program although it is a cost center, for
accounting purposes, within the Fire Department's
Fire Suppression Program.

While these program budgets serve as the basic
building blocks of the budget, there are three
additional organizational levels above the program
level in the budget. The basic budget presentation
is modified slightly depending on the structure of a
department. The three levels are:

e The Division Level for budgeted units within
some departments.

BeuUpdvgreste Ome gram itizea ital toon

and

e The Department Level, which includes
departments, commissions, and other offices.

e The Cabinet Level, which includes functionally
related departments.

Description of Organization and Definition
of Categories

This section outlines the structure of information
reported within each department and program in
the budget. It also defines what is included in the
mission statements, services, performance
objectives, service indicators, capital expenses,
and external funds for FY02.

Department/Division Level
Mission statement: The mission statement is a
fundamental statement of purpose.

Performance Objectives: These objectives reflect
stated goals for which the division or department
will be held accountable in FY02 and measured on
a monthly basis.

Description: This text furnishes a general overview
of the department and its responsibilities and lists
examples of major services provided.

Authorizing Statutes: Statutes and ordinances that
create departments as well as endow them with
powers.

Operating Budget: The operating budget
presentation includes a table displaying total
operating and external budgets by program
beginning with FY99 actual expenses through the
FY02 budget.

Program Level

Description: This section furnishes a general
overview of the program and its responsibilities
and lists examples of major services provided.
Added context is often displayed on the demand
for services or to illustrate the scope of the
department’s responsibilities in more detail.

Program Performance Objectives: Each program
identifies the FY02 objectives by which the
department will be measured.

Program Outcomes: The outcomes illustrate the
intended achievement levels for program
objectives in quantifiable terms.

Selected Service Indicators: The selected service
indicators provide brief comparisons of personnel,

Glossary ey y;

funding, and measures of how well the program
has performed for FY99 and FY00. It also includes
FY01 and FY02 projected service levels, budgeted
staff, and funding levels. Service levels may
measure workload, service quality, inputs, outputs,
efficiency, or productivity.

In cases where the service level depends on an
external factor (for example, the number of tax
abatements or building permits applied for), the
promised service level reflects the workload that
the program is equipped to handle efficiently and
effectively.

Programs report levels of service outputs and
promised outcome achievements on a monthly
basis.

Financial Data

The financial data identifies the major groups and
expenditure account codes (for example, Personal
Services/Overtime, Supplies and Materials/Office
Supplies), the historical expenditures, and the
proposed appropriations in these groups and
expenditure account codes.

Two financial sheets are provided on the FY02
Operating Budget: Department History by
Expenditure Account Code and Department
Personnel data.

Department History by Expenditure
Account Code:

The expenditure account codes are listed within
six expenditure groups. Dollar amounts are shown
for:

FY99 actual expenditure,

FY00 actual expenditure,

FY01 appropriation,

FY02 appropriation, and

The difference between the FY01 appropriation
and the FY02 appropriation.

Department Personnel Data

The personnel data show funding for permanent
positions, including existing and proposed
positions. All permanent positions are listed by
salary grade within the department or division.
The total salary request is listed for these
positions.

1. 528 Budget

For each position shown, the following information
is provided:

Title: The civil service/personnel system job title
of the position.

Grade: The code for the salary grade of the
position.

Position and Salary Requirement: These columns are
used to show the full-time equivalent personnel
positions that a department may fill based on
available funds and the total funding provided for
that title for the fiscal year.

Total Dollars: The total dollars for the permanent
personnel, shown at the bottom right of the
personnel sheet, reflects the amount of funding
required to support personnel prior to
adjustments. As applicable, this figure is then
adjusted by differential payments, other payments,
chargebacks, and salary savings.

Differential Payments: These payments are for
employees who are either in intermittent job titles
or who are entitled to extra additional payments
based on shift (for example, night shifts). This
figure is added to the salary requirements.

Other: These figures cover other payments such as
sick leave and vacation buyback, longevity pay,
and other similar distributions.

Chargebacks: These figures are payroll costs to be
charged to another fund or appropriation.

Salary Savings: This figure reflects savings due to
employee turnover. The amount is estimated
based on historical experience and subtracted
from the total salary requirements.

External Funds

The financial data identify the major groups and
object codes of external funds expenditures (for
example, Personal Services/Overtime, Supplies
and Materials/Office Supplies), the historical
expenditures, and the proposed appropriations in
these groups and objects. The personnel data show
permanent positions, including existing and
proposed positions funded with external funds. All
permanent positions are listed by salary grade
within the department or division. The total salary
request is listed for these positions. Program
services and projects financed by external funds
are also listed by department. Each profile

Olt a: a nelizpast Joe seained

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includes a description of the program or project,
the source of funding, and the geographic area or
citizens benefiting from the program or project.

Capital Budget

The capital section provides an overview of
projects and major initiatives for departments
charged with managing facilities and major
equipment assets. The dollar amounts are shown
for:

FY99 actual capital expenditures,

e FY00 actual capital expenditures,

e FY(1 projected capital expenditures,
FY02 proposed capital expenditures

The next section reviews departmental capital
project profiles, including descriptions of each
project scope, the department managing the
project, and the status and location of each
project. A table summarizes the total capital
dollars authorized for project expenditure for not
only FY02, but also for future years, as well as
whether the source is city authorization or other
funding such as federal and state infrastructure
grants or trust funds. A listing of actual and
planned capital expenditures in comparison to
authorized dollars is beneath this table.

Glossary of Terms
Account: A classification of appropriation by
expenditure account code.

Account Number: The number by which the Auditor
categorizes an appropriation. For budget purposes,
also known as appropriation code.

Accrual Basis: The basis of accounting under which
transactions are recognized when they occur,
regardless of the timing of related cash flows.

Allotment: The amount that can be expended
quarterly for personnel as submitted to the City
Auditor at the beginning of each fiscal year.

Appropriation: The legal authorization to expend
funds during a specific period, usually one fiscal
year. In Boston, the City Council is the
appropriating authority.

Authorization: The legal consent to expend funds.

Baseline Budget: A budget that describes the
funding required for maintaining current levels of
service or activity.

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and

Bond: An interest-bearing promise to pay, with a
specific maturity.

Bonds Authorized and Unissued: The portion of
approved bond authorizations or loan orders that
have not yet been borrowed for or issued as bonds.
Bond authorization available for future bond
issues within a City’s debt service plan.

Budget: A formal estimate of expenditures and
revenues for a defined period, usually for one year.

Budget Amendment: A change from originally
budgeted quotas; the forms filed by departments
with the Human Resources Department and the
Office of Budget Management to justify these
changes.

Capital Budget: A plan for capital expenditures for
projects to be included during the first year of the
capital program also known as a capital spending
plan.

Capital Plan: A multi-year plan of proposed outlays
for acquiring long-term assets and the means for
financing those acquisitions. Usually, financing is
by long-term debt.

Capital Improvement: An expenditure that adds to
the useful life of the City’s fixed assets.

Capital Improvement Program: A multi-year plan for
capital expenditures to be incurred each year over
a fixed period of years to meet capital needs.

Cash basis: A basis of accounting under which
transactions are recognized only when cash
changes hands.

Chapter 90 Funds: A state-funded program for
payments to cities and towns for 100 percent of the
costs of construction, reconstruction, and
improvements to public ways.

Chargeback: A method of assessing departments for
costs incurred by them for which they are not
billed directly. Charges for telephone, postage, and
printing are examples. Also, departmental
expenditures that can be paid for with external or
capital funds.

Cherry Sheet: A cherry-colored form showing all
Commonwealth and county charges, distributions
and reimbursements to a city or town as certified
by the state Director of the Bureau of Accounts.

Collective Bargaining: The process of negotiations
between the City administration and bargaining

Galcous Ss airy 1959

units (unions) regarding the salary and fringe
benefits of city employees.

Commission: An appointed policy setting body.

Community Development Block Grant (CDBG): A
federal entitlement program that provides
community development funds based on a formula.

Computer-Aided-Dispatch (CAD) System: A network
of computers that facilitates the dispatching of
emergency Police, Fire, or Emergency Medical
Service personnel.

Credit Balance: See departmental deficit.

Credit Rating: A formal evaluation of credit history
and capability of repaying obligations. The bond
ratings assigned by Moodys Investors Service and
Standard & Poors Corporation are forms of credit
rating.

Credit Transfer: The transfer of appropriations from
one expenditure account code to another within a
department; the form used to effect such a change.

Debit Transfer: Moving actual expenditures from
one expenditure account code to another within or
between departments; the form used for such
moves.

Debt Limit: The maximum amount of debt that a
governmental unit may incur under constitutional,
statutory, or charter requirements. The limitation
is usually a percentage of assessed valuation and
may be fixed upon either gross or net debt.

Debt Outstanding: The general obligation bonds that
have been sold to cover the costs of the City’s
capital outlay expenditures from bond funds.

Debt Service: The annual amount of money
necessary to pay the interest and principal on
outstanding debt.

Department: A major service-providing entity of city
government.

Departmental Deficit: A condition that exists when
departmental expenditures exceed departmental
appropriations; also refers to the over-expended
amount and credit balance.

Departmental Income: Income generated by a
specific city department, usually as a result of user
revenues applied for services rendered. Parking
meter charges, building permit fees, and traffic
fines are examples of departmental income.

160 Budget

Division: A budgeted sub-unit of a department.

Encumbrance: Funds set aside from an
appropriation to pay a known future liability.

Excise: A tax applying to a specific industry or
good. The jet fuel tax and the hotel/motel
occupancy tax are examples of excises.

Expenditure Account Code: An expenditure
classification according to the type of item
purchased or service obtained, for example,
emergency employees, communications, food
supplies, and automotive equipment.

Expenditure: An actual payment for goods or
services received.

External Fund: Money that is not generated from
city sources, but is received by an agency,
examples are grants or trusts.

Fiscal Year: The twelve-month financial period
used by the City, which begins July 1 and ends
June 30 of the following calendar year. The City’s
fiscal year is numbered according to the year in
which it ends.

Fixed Debt: Long-term obligations other than
bonds, such as judgments, mortgages, and long-
term serial notes or certificates of indebtedness.

Full Faith and Credit: A pledge of the general taxing
powers for the payment of governmental
obligations. Bonds carrying such pledges are
usually referred to as general obligation or full
faith and credit bonds.

Full-time Equivalent Position: A concept used to
group together part-time positions into full-time
units.

Fund: An independent fiscal and accounting entity
with a self-balancing set of accounts recording
cash and/or other resources with all related
liabilities, obligations, reserves, and equities that
are segregated for specific activities or objectives.
Among the fund types used by the City are
General, Special, Trust, and Capital.

GAAP: Generally Accepted Accounting Principles.
The basic principles of accounting and reporting
applicable to state and local governments,
including the use of the modified accrual or
accrual basis of accounting, as appropriate, for
measuring financial position and operating results.

Organization and

GolOespstdulsV

These principles must be observed to provide a
basis of comparison for governmental units.

General Fund: The fund into which the general
(non-earmarked) revenues of the municipality are
deposited and from which money is appropriated
to pay the general expenses of the municipality.

General Obligation (G.0.) Bonds*: Bonds for whose
payment, the full faith, and credit of the issuer has
been pledged. More commonly, but not
necessarily, general obligation bonds are payable
from property taxes and other general revenues.

Goal: A statement, in general terms, of a desired
condition, state of affairs, or situation. Goals are
long-term and not usually directly measurable
without objectives. By establishing goals, the
agencies can define their missions and then the
methods for achieving those goals.

Grant Year: The grant accounting period designated
by the requirements of a specific grant.

Headcount: The actual number of full-time or full-
time equivalent employees in a department at any
given time. The headcount will change from time
to time as employees are hired or terminated.

Interest: Compensation paid or to be paid for the
use of money, including interest payable at
periodic intervals or discount at the time a loan is
made.

Interest Rate: The interest payable, expressed as a
percentage of the principal available for use
during a specified period of time.

Line Item: See Expenditure Account Code.

Massachusetts Water Pollution Abatement Trust
(MWPAT): A statewide revolving fund that
commenced operations in 1990 to address
necessary environmental actions outlined in the
Federal Clean Water Act. This fund revolves by
MWPAT issuing large pooled bond issues for
various environmental construction projects and
then loaning these funds to communities with
twenty-year zero interest repayment schedules.

Mayoral Reallocation: A transfer of appropriations
of up to $3 million that may be authorized by the
Mayor up to April 15 in a given fiscal year to
relieve departmental deficits or meet
unanticipated financial problems.

Mission: A general overview of the purposes and
major activities of an agency or program.

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and

Modified Accrual Basis: The accrual basis of
accounting adapted to the governmental fund
type, wherein only current assets and current
liabilities are generally reported on fund balance
sheets and the fund operating statements present
financial flow information (revenues and
expenditures). Revenues are recognized when
they become both measurable and available to
finance expenditures of the current period.
Expenditures are recognized when the related
fund liability is incurred except for a few specific
exceptions. All governmental funds and
expendable trust funds are accounted for using
the modified accrual basis of accounting.

Objective: See Performance Objective.

Official Statement (0.S.): The municipal equivalent
of a prospectus - history, background of managers,
fund objectives, a financial statement, and other
pertinent data related to the city’s financial
condition.

Operating Budget: A legally adopted plan for
anticipated expenditures for personnel, supplies,
equipment and services in one fiscal year.

Outcome: A quantifiable, reportable measure of the
intended performance objective; reflects the
results of a program in terms of impact on the
level of need or the problem being addressed.

Payments-In-Lieu-of-Taxes: Income to replace the
loss of tax revenue resulting from property
exempted from taxation.

Performance Measure: An indicator of achievement.
Measures can be defined for identifying output,
work or service quality, efficiency, effectiveness,
and productivity.

Performance Objective: A statement of proposed
accomplishments or attainments. Objectives are
short-term and measurable.

PLOS: Promised Level of Service, the estimate of
the outputs or outcomes being measured, based on
the resources provided by the budget.

Principal: The face amount of a bond, exclusive of
accrued interest.

Program: An organized group of activities, and the
resources to carry them out, that is directed
toward attaining objectives.

Program Evaluation: The process of comparing
actual service levels achieved with promised

Gilronseseaniey 4

results; also refers to assessing, for the purpose of
improving the way a program operates.

Proposition 2 1/2: A statewide tax limitation
initiative petition limiting the property tax levy in
cities and towns in the Commonwealth to 2 1/2
percent of the full and fair cash valuation of the
taxable real and personal property in that city or
town. The statute also places an annual growth
cap of 2 1/2 percent on the increase in the
property tax levy.

Quota: The planned number of positions that can
be filled by a department, subject to the
availability of funds. The quota can refer either to
specific titles or to the number of personnel in the
entire department. The quota of positions will
change, from time to time, by means of a budget
amendment. The actual number of personnel
working in a department at any given time may
differ from the quota.

Reimbursement Grant: A federal or state grant that
is paid to the City once a project is completed and
inspected for conformance to the grant contract.
The City must provide the full funding for the
project until the reimbursement is received.

Reserve Fund: An appropriation for contingencies.
Revenue: Income received by the City.

Salary Savings: For budget purposes, an amount
that will be saved from annual turnover of
personnel in any department.

Special Appropriation: An authorization to expend
funds for a specific project not encompassed by
normal operating categories.

Special Revenue Fund: Used to account for the
proceeds of specific revenue sources (other than
special assessments, expendable trusts, or sources
for major capital projects) that are legally
restricted to expenditures for specific purposes. A
special revenue fund is accounted for in the same
manner as a General Fund.

STAT: Statutory accounting and reporting that is
adopted by a legislative body of a governmental
entity. The method of recording and reporting
actual expenditures and revenues within a plan of
financial operations that establishes a basis for the
control and evaluation of activities financed
through the General Fund. When the budget basis
and basis of accounting are different, a

1gG 72 Budget

governmental unit usually maintains its records on
a budget basis.

State Distributions: All City revenue flowing from
the state. Major categories include reimbursement
for loss of taxes, educational distributions and
reimbursements, direct education expenditures,
general government reimbursements, and other
distributions.

Sub-Program: A sub-program is defined discretely,
for purposes of management. Several related sub-
programs may make up a larger program.

Supplementary/Supplemental Appropriation: An
appropriation that is submitted to the City Council
after the operating budget has been approved.
Such appropriations must specify a revenue
source.

Tax Exempt Bonds: Bonds exempt from federal
income, state income, or state or local personal
property taxes.

Third Party Payment: Medical payments, usually
from an insurance Carrier to a health care provider
on behalf of an injured or infirm party.

Trust Funds: Funds held by the City in a fiduciary
role, to be expended for the purposes specified by
the donor.

Unliquidated Reserve: A fund established at year-
end, used to pay for goods and services received
this year, but not billed until next year.

Os gtasnhiezeatt ison easnra

Glossary

— ——

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